Weitz Nebraska Tax-Free Income Fund Q1 2024 Commentary

seekingalpha04-26

The Nebraska Tax-Free Income Fund returned -0.46% in the first quarter compared to a -0.37% return for the Bloomberg 5-Year Municipal Bond Index.For the one-year period ended March 31, 2024, the Fund'...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWeitz Nebraska Tax-Free Income Fund Q1 2024 Commentary\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-26 19:40 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4686623-weitz-nebraska-tax-free-income-fund-q1-2024-commentary><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The Nebraska Tax-Free Income Fund returned -0.46% in the first quarter compared to a -0.37% return for the Bloomberg 5-Year Municipal Bond Index.For the one-year period ended March 31, 2024, the Fund'...</p>\n\n<a href=\"https://seekingalpha.com/article/4686623-weitz-nebraska-tax-free-income-fund-q1-2024-commentary\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"AMT.AU","symbol_name":"ALLEGRA MEDICAL TECHNOLOGIES","start_time":0,"source_url":"https://seekingalpha.com/article/4686623-weitz-nebraska-tax-free-income-fund-q1-2024-commentary","article_id":"2430278730","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/164333934/image_164333934.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2430278730","pubTimestamp":1714131600,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"The Nebraska Tax-Free Income Fund returned -0.46% in the first quarter compared to a -0.37% return for the Bloomberg 5-Year Municipal Bond Index.For the one-year period ended March 31, 2024, the Fund'","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"AMT.AU":"ALLEGRA MEDICAL TECHNOLOGIES","BK4588":"碎股","BK4581":"高盛持仓","NAV":"纳威司达","BK4554":"元宇宙及AR概念","BK4219":"电信塔房地产信托","BK4084":"特种房地产投资信托","AMT":"美国电塔","BK7501":"新冠治疗股","BK4534":"瑞士信贷持仓","BK7007":"医疗保健设备","BK4585":"ETF&股票定投概念"},"translate_title":"韦茨内布拉斯加州免税收入基金Q1 2024评论","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AMT.AU":1,"AMT":1,"NAV":1,"US30Y.BOND":0.9,"US7Y.BOND":0.9,"US6M.BOND":0.9,"US5Y.BOND":0.9,"US3Y.BOND":0.9,"US2Y.BOND":0.9,"US12M.BOND":0.9,"US10Y.BOND":0.9,"US912796CX52.BOND":0.6,"US912797HH31.BOND":0.6,"US912797HG57.BOND":0.6,"US912797HE00.BOND":0.6,"US912797GW17.BOND":0.6,"US912797GL51.BOND":0.6,"US912797GK78.BOND":0.6,"US912797GB79.BOND":0.6,"US912797FS14.BOND":0.6,"US912797FH58.BOND":0.6},"content_text":"The Nebraska Tax-Free Income Fund returned -0.46% in the first quarter compared to a -0.37% return for the Bloomberg 5-Year Municipal Bond Index.For the one-year period ended March 31, 2024, the Fund's total return was +1.44% compared to a +1.95% return for the index.Turning to portfolio metrics, the average effective duration of the Fund was unchanged at 3.1 years on March 31, 2024, from December 31, 2023.   Walter Bibikow/DigitalVision via Getty Images The Nebraska Tax-Free Income Fund returned -0.46% in the first quarter compared to a -0.37% return for the Bloomberg 5-Year Municipal Bond Index. For the one-year period ended March 31, 2024, the Fund's total return was +1.44% compared to a +1.95% return for the index. Overview After a stunning “everything rally” in the fourth quarter, U.S. fixed income markets took a breather to start 2024. As illustrated in the chart below, interest rates increased across the yield curve, as investors dialed back expectations of significant Federal Reserve interest rate cuts in 2024. The result was modest gains for shorter-duration and more credit-sensitive sectors of the market and small to moderate losses for intermediate and longer-duration bonds.  During the first quarter of 2024, municipal bonds modestly underperformed their U.S. Treasury counterparts as the ratio of the 5-year AAA-rated municipal bond to the 5-year Treasury (the 'tenor' or maturity profile that most resembles the Nebraska Tax-Free Income Fund) increased from 58% on December 31, 2023, to 60% on March 31, 2024. The Municipal/Treasury ratio (M/T ratio) measures the relative attractiveness of tax-free municipal bonds. All else equal, the higher the ratio, the more appealing municipal bonds become, given their tax-advantaged status. The chart below is a 20-year graph of the 5-year M/T ratio. The current ratio (right-hand side of graph) resides near the lows of the past 20 years, well below the peaks/highs reached in the Great Financial Crisis of 2008/2009, the onset of COVID in 2020, and the 20-year average of 87%.  Overall, today's M/T ratio would suggest that municipal bonds are less appealing compared to their taxable counterparts than they have been over the past 20 years. However, the increased nominal yield environment, improved fiscal position of many municipal bond issuers, lower supply, and broad-based demand (retail and institutional) help to explain today's lower M/T ratio. Top Quarterly Contributors Hospital revenue bonds issued by Douglas County, Nebraska (Madonna Rehabilitation). Top Quarterly Detractors  Combined utility revenue bonds issued by Dawson Nebraska Public Power District. School district general obligation bonds issued by Wayne County, Nebraska; and Papillion-La Vista, Nebraska. Single family housing revenue bonds issued by the Nebraska State Investment Finance Authority. General revenue bonds issued by Boys Town Village. Tax-supported lease revenue bonds issued by Papillion, Nebraska, Municipal Facilities Corporation.  One-Year Results For the past 12 months, nearly all segments contributed to positive Fund results. The segments with the largest contributions included city general obligation bonds, hospital revenue bonds, tax-supported lease revenue bonds, school district general obligation bonds, combined utilities revenue bonds, water and sewer revenue bonds, and electricity and public power bonds. Isolated individual bonds within segments above detracted modestly from one-year results. None of the isolated price declines were a result of credit deterioration or downgrade. Portfolio Metrics Turning to portfolio metrics, the average effective duration of the Fund was unchanged at 3.1 years on March 31, 2024, from December 31, 2023. Average effective maturity increased from 3.5 years to 3.8 years over the same timeframe. Overall asset quality remains high, with approximately 93% rated A or better by one or more of the nationally recognized statistical rating organizations. Following are additional details regarding the breakdown of our holdings. Our investments are broad, and they are all backed by a consistent philosophy: we strive to own only those investments we believe compensate us for the incremental credit risk. Our overall goal is to invest in a portfolio of bonds of varying maturities that we believe offer attractive risk-adjusted returns, taking into consideration the general level of interest rates and the credit quality of each investment.   This material must be preceded or accompanied by a prospectus or summary prospectus. 30-Day SEC Yield represents net investment income earned by a fund over a 30-day period, expressed as an annual percentage rate based on the Fund's share price at the end of the 30-day period. Subsidized yield reflects fee waivers and/or expense reimbursements during the period. Without such fee waivers and/or expense reimbursements, if any; yields would have been lower. Unsubsidized yield does not adjust for any fee waivers and/or expense reimbursement in effect. Distribution yield is a measure of yield calculated by taking a fund's most recent income distribution payment divided by its net asset value (NAV) and expressed as an annual rate. Data is for the quarter ending 03/31/2023. The opinions expressed are those of Weitz Investment Management and are not meant as investment advice or to predict or project the future performance of any investment product. The opinions are current through 04/20/2024, are subject to change at any time based on market and other current conditions, and no forecasts can be guaranteed. This commentary is being provided as a general source of information and is not intended as a recommendation to purchase, sell, or hold any specific security or to engage in any investment strategy. Investment decisions should always be made based on an investor's specific objectives, financial needs, risk tolerance and time horizon. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Please visit weitzinvestments.com for the most recent month-end performance. Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. Net and Gross Expense Ratios are as of the Fund's most recent prospectus. Certain Funds have entered into fee waiver and/or expense reimbursement arrangements with the Investment Advisor. In these cases, the Advisor has contractually agreed to waive a portion of the Advisor's fee and reimburse certain expenses (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses) to limit the total annual fund operating expenses of the Class's average daily net assets through 07/31/2024. The Gross Expense Ratio reflects the total annual operating expenses of the fund before any fee waivers or reimbursements. The Net Expense Ratio reflects the total annual operating expenses of the Fund after taking into account any such fee waiver and/or expense reimbursement. The net expense ratio represents what investors are ultimately charged to be invested in a mutual fund. On 12/29/2006, the Nebraska Tax-Free Income Fund succeeded to substantially all of the assets of Weitz Income Partners Limited Partnership. The investment objectives, policies and restrictions of the Fund is materially equivalent to those of the Partnership, and the Partnership was managed at all times with full investment authority by the Investment Adviser. The performance information includes performance for the Partnership. The Partnership was not registered under the Investment Company Act of 1940 and, therefore, were not subject to certain investment or other restrictions or requirements imposed by the 1940 Act or the Internal Revenue Code. If the Partnership had been registered under the 1940 Act, the Partnership's performance might have been adversely affected. Index performance is hypothetical and is shown for illustrative purposes only. You cannot invest directly in an index. The Bloomberg 5-Year Municipal Bond index is a capitalization weighted bond index generally representative of major municipal bonds of all quality ratings with an average maturity of approximately five years. Holdings are subject to change and may not be representative of the Fund's current or future investments. Income from municipal securities is generally free from federal taxes and state taxes for residents of the issuing state. While the interest income is tax-free, capital gains, if any, will be subject to taxes. Income for some investors may be subject to the federal Alternative Minimum Tax (AMT). Credit ratings are assigned to underlying securities utilizing ratings from a Nationally Recognized Statistical Rating Organization (NRSRO) such as Moody's and Fitch, or other rating agencies and applying the following hierarchy: security is determined to be Investment Grade if it has been rated at least BBB- by one credit rating agency; once determined to be Investment Grade (BBB- and above) or Non-Investment Grade (BB+ and below) where multiple ratings are available, the lowest rating is assigned. Mortgage-related securities issued and guaranteed by government-sponsored agencies such as Fannie Mae and Freddie Mac are generally not rated by rating agencies. Securities that are not rated do not necessarily indicate low quality. Ratings are shown in the Fitch scale (e.g., AAA). Ratings and portfolio credit quality may change over time. The Fund itself has not been rated by a credit rating agency. Definitions: Average effective duration provides a measure of a fund's interest-rate sensitivity. The longer a fund's duration, the more sensitive the fund is to shifts in interest rates. Average effective maturity is the weighted average of the maturities of a fund's underlying bonds. Yield to worst (YTW) is the lowest potential yield that can be received on a bond portfolio without the underlying issuers defaulting. Consider these risks before investing: All investments involve risks, including possible loss of principal. These risks include market risks, such as political, regulatory, economic, social and health risks (including the risks presented by the spread of infectious diseases). In addition, because the Fund may have a more concentrated portfolio than certain other mutual funds, the performance of each holding in the Fund has a greater impact upon the overall portfolio, which increases risk. See the Fund’s prospectus for a further discussion of risks related to the Fund. Investors should consider carefully the investment objectives, risks, and charges and expenses of a fund before investing. This and other important information is contained in the prospectus and summary prospectus, which may be obtained at weitzinvestments.com or from a financial advisor. Please read the prospectus carefully before investing. Weitz Securities, Inc. is the distributor of the Weitz Funds. \nClick to enlarge Original Post Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.Editor's Note: This article covers one or more microcap stocks. 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