Bishop Street Hawaii Municipal Bond Fund Class Institutional (BSHIX)

Overview

The fund described focuses on investing a substantial portion of its assets in investment grade municipal bonds that are primarily exempt from regular federal and Hawaii state income taxes. This suggests a strategic approach aimed at providing tax-advantaged income to its investors, particularly those in Hawaii. Given its allowance to also invest in municipal bonds outside of Hawaii, the fund offers a broader exposure to the U.S. municipal bond market. The fund's strategy of not limiting the average maturity of its portfolio indicates a flexible investment approach, which could involve varying durations to potentially optimize returns or manage risks according to market conditions. As a non-diversified fund, it may concentrate its investments more than a diversified fund, potentially leading to higher volatility or risk of loss, but also the possibility of higher returns.

Products and Services

Within its investment strategy, the fund offers several key products and services:

• Investment Grade Municipal Bonds

  This service invests in high-quality municipal bonds that are rated as investment grade, indicating lower credit risk. These bonds are chosen with the objective of providing stable and tax-advantaged income, reflecting a conservative investment approach aimed at preserving capital while generating returns.

• Tax-Exempt Income

  The fund specializes in municipal bonds whose interest income is exempt from regular federal and Hawaii state income taxes. This is particularly beneficial for investors in higher tax brackets looking for tax-efficient income sources. It reduces the taxable income of investors, thereby enhancing the after-tax return on their investments.

• Flexible Investment in U.S. States, Territories, and Possessions Bonds

  While the fund primarily focuses on Hawaii, it retains the flexibility to invest in municipal bonds issued by other U.S. states, territories, and possessions. This broadens the fund's geographical exposure and diversification, potentially reducing risks associated with concentrating investments in a single state or type of bond.

• No Set Limit on Portfolio Maturity

  The fund does not impose a limit on the average maturity of its portfolio, allowing it more flexibility in its investment decisions. This approach enables the fund managers to adjust the duration of the portfolio to respond to interest rate movements and market conditions, aiming to optimize returns for investors.