Three Things to Consider Around Muni-Strategy Adoption

David Shalom


When investors think about credit hedge funds, muni hedge funds are often overlooked – creating an uncrowded marketplace full of potential. Prime Services’ David Shalom shares insights about today’s muni market investors and opportunities for generating attractive returns.

At BNY Mellon | Pershing, our Capital Introductions group works with institutions and with private wealth investors to help connect them with municipal bond hedge fund managers.

Consideration 1: The muni hedge fund opportunity

When investors think about credit hedge funds, they often think about fixed income, corporate credit, and sovereign rates trading strategies – so muni hedge funds often go overlooked and the space is relatively uncrowded. As a result, there are opportunities for today’s muni hedge fund managers to potentially generate attractive returns.

Consideration 2: Do you fit the investor profile?

There are three types of investors in today’s muni markets:

  1. Individuals who invest directly into the market
  2. Passively managed strategies offered by investment managers via mutual funds and ETFs, and by wealth managers directly
  3. Actively managed strategies managed by discretionary bond pickers and by quants

Consideration 3: Portfolio diversification

The Prime Services team at Pershing provides financing to municipal bond investment managers. Our clients use leverage to amplify returns on the upside and the downside.

If you’re thinking about launching a municipal bond hedge fund or want to learn about investing into muni hedge funds, please reach out to our Prime Services team at Pershing.

Published by The Bond Buyer, June 13, 2019

David Shalom

David Shalom is a Director and founding member of the Capital Introductions team at BNY Mellon | Pershing, which serves as an intermediary between professional investors and alternative investment managers. David assists clients in their capital raising efforts through targeted introductions to institutional allocators and private wealth investors.