Brown Brothers Starts Fund for Investment-Grade Municipal Bonds

Apr 04, 2014 12:00 am ET

April 4 (Bloomberg News) -- Brown Brothers Harriman & Co., the closely held asset-management firm, has created a new municipal-bond mutual fund as state and city debt is rallying the most in five years.

The BBH Intermediate Municipal Bond Fund, BBINX, will focus on tax-exempt securities with an investment-grade ranking from at least one nationally recognized ratings firm, according to the fund’s prospectus, dated April 1. The fund’s size is $50 million, Gregory Steier, head of tax-exempt fixed income at New York-based BBH, said in a telephone interview.

The fund plans to purchase 75 to 125 securities from issuers that provide essential services, have a strong competitive position and on-time financial filings, according to BBH’s website. The average duration is projected to be three to seven years, according to the prospectus.

“We have seen tremendous growth in our mutual fund investor base and wanted to provide access for these clients to our investment expertise in the area of municipal bonds, as well,” Steier said in a statement.

The new investment vehicle is BBH’s only mutual fund that focuses on state and local debt, according to its website. The minimum initial investment is $5,000, according to the prospectus. BBH had $57.8 billion in assets under management as of Feb. 28, said Tom Pinto, a company spokesman.

The fund kicks off as municipal securities have earned 3.7 percent this year, the best annual start since 2009, according to Bank of America Merrill Lynch data.