Tax-exempt bonds (e.g., municipal bonds) should be a significant holding in a fixed-income strategy for taxable investors. Payden & Rygel's tax-sensitive strategies seek to maximize after-tax total return and are customized to meet the unique investment objectives of each client as well as clients’ tax status and state of domicile.

We believe that superior performance is derived through the inclusion of both taxable and tax-exempt securities in the portfolio opportunity set. The segmented nature of the municipal (tax-exempt) market leads to inefficiencies that can translate into excess returns for those managers with the experience, sophistication and flexibility to capitalize on these opportunities. We believe municipal investing requires elements of both a top-down, as well as bottom-up, investment style. Market surveillance plays a critical role in the municipal market given the significant influence that supply and demand imbalances exert on performance.

Short-term Tax Sensitive strategies seek to earn higher income than money market alternatives while preserving capital. Short-maturity municipal bonds as well as Treasury, Agency, corporate and asset-backed bonds may be used.

Benchmark	Barclays Capital 1-Year Municipal Index, Custom indexes
Securities Employed	Municipal bonds (revenue, general obligation, etc.), governments, corporate bonds, and asset-backed securities
Maturity Range	0 - 5 years
Duration Range	0.5 - 2.5 years
Average Credit Quality	AA+

The Intermediate strategy is a core portfolio strategy. The intermediate maturities along the yield curve provide a large portion of the return of longer securities with a fraction of the price volatility. The portfolios are tailored to meet each client's unique investment goals and tolerance for risk and can be customized to emphasize in-state tax benefits where appropriate.

Benchmark	Barclays Capital 1 - 10 Municipal Year Index
Securities Employed	Municipal bonds (revenue, general obligation, etc.), governments, mortgages, corporate bonds
Maturity Range	1 - 25 years
Duration Range	3.5 - 5.5 years
Average Credit Quality	AA+

The Long-term strategy is designed for investors who may have long-term liabilities against which they are managing their assets or those with a more income oriented focus. The strategy generally invests in securities across the entire maturity spectrum, and includes sectors such as government securities and mortgage-backed securities in addition to traditional municipal securities.

Benchmark	Barclays Capital 10-Year Municipal Index
Securities Employed	Municipal bonds (revenue, general obligation, etc.), governments, mortgages, corporate bonds
Maturity Range	1 - 40 years
Duration Range	5.0 - 7.0 years
Average Credit Quality	AA