Northern Arizona Tax-Exempt Fund Q3 2025 Commentary
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Northern Trust Asset Management5 FollowersFollow5ShareSavePlay(7min)CommentsSummaryNorthern Arizona Tax-Exempt Fund performed in-line with the benchmark for the quarter. Duration positioning was additive to performance while security selection detracted.Major asset class returns were largely positive, with outperformance in equities relative to fixed income.Treasury yields drifted lower, with the 2-year down 11 basis points (0.11%) to 3.61% and the 10-year falling 8 basis points (0.08%) to 4.15%—both near the bottom of their year-to-date trading range. bin kontan/iStock via Getty Images It was an atypical macro backdrop, as economic activity defied expectations for a slowdown despite clear signs of labor market deceleration. Following several upward revisions, U.S. second- quarter real GDP growth—initially reported in July—was finalized at 3.8% annualized, well above theThis article was written byNorthern Trust Asset Management5 FollowersFollowNorthern Trust Asset Management is a global investment manager that helps investors navigate changing market environments in efforts to realize their long-term objectives. Entrusted with $1.2 trillion in assets under management as of March 31, 2024, we understand that investing ultimately serves a greater purpose and believe investors should be compensated for the risks they take — in all market environments and any investment strategy. That’s why we combine robust capital markets research, expert portfolio construction and comprehensive risk management in an effort to craft innovative and efficient solutions that seek to deliver targeted investment outcomes. As engaged contributors to our communities, we consider it a great privilege to serve our investors and our communities with integrity, respect and transparency.
Northern Trust Asset Management is composed of Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Fund Managers (Ireland) Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc., 50 South Capital Advisors, LLC, Northern Trust Asset Management Australia Pty Ltd, and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company. Note: This account is not managed or monitored by Northern Trust Asset Management, and any messages sent via Seeking Alpha will not receive a response. For inquiries or communication, please use Northern Trust Asset Management's official channels.Quick InsightsHow did the Arizona Tax-Exempt Fund perform relative to its benchmark?The Fund performed in-line with the Bloomberg Arizona Municipal Bond Index for the quarter, with duration positioning contributing positively and security selection detracting.What factors drove municipal bond outperformance versus Treasuries in Q3?Municipal bonds outperformed due to strong demand, elevated inflows, favorable technicals, and the preservation of the municipal tax-exemption, resulting in the highest September return since 2009.What risks should investors monitor for the Arizona Tax-Exempt Fund going forward?Key risks include regional concentration, potential changes to tax-exempt status, interest rate volatility, and the Fund’s non-diversified structure, which could amplify single-issuer impacts.Recommended For You