After careful research, our investment committee has chosen to replace the Invesco Oppenheimer Senior Floating Rate fund (OOSAX) with the Lord Abbett Short Duration Income fund (LDLFX) in your Liberty One 1 – 6 and Tactical Income Solution portfolio(s). This change highlights our ongoing diligence relating to credit markets by upgrading the credit quality of our tactical fixed income positions while still managing for interest rate and principal risks.

Given the uncertainties tied to the economic impact from COVID-19 and the disruption in oil markets, we believe that certain industries/companies are more susceptible to an economic fallout than others, and that their debt service obligations are coming under further distress, which would impact the prices and debt structure of certain debt securities. Although a vast majority of companies have yet to announce such developments, we view that the probabilities are rising as economic uncertainties remain. In order to mitigate exposure to some of these credit risks, our Investment Committee has chosen to replace OOSAX with LDLFX.

LDLFX’s debt composition primarily consists of short-term investment grade corporate credit in less susceptible sectors. Secondly, although long-term government debt provides greater downside protection in volatile environments, it is in our view that they are trading at extremely high valuations and provide unattractive risk-adjusted return profiles for clients currently. Spikes in Treasury yields due to a variety of factors exposes clients to principal and interest rate risks. One example could be the additional fiscal spending to alleviate the economic impact of COVID-19 would require the US federal government to issue more federal debt, which could cause yields to rise as more Treasuries flood the market and our fiscal position deteriorates.

You need not take action at this time.

If you have any questions about these or any changes in your Liberty One portfolio(s), potential tax implications, or would simply like to learn more, please contact your financial advisor.

Thank you for your continued trust and confidence!