Cavanal Hill Bond Fund Quarterly Commentary

1Q 2024

Market Overview

Credit spreads across fixed income sectors have tightened significantly thus far in 2024, and they appear relatively tight historically. However, without a catalyst to drive spreads wider, they can remain at tight levels for long periods. While further monetary tightening may be limited, the U.S. economy’s continued strength provides a tailwind to credit, and we currently see little reason to reduce credit exposure.

Positioning the Fund

Portfolio composition is subject to change

The market has pushed back expectations for interest rate cuts, and bond yields rose in the first quarter. Given the generally attractive level of yields available in fixed income, we prefer to take a more neutral stance on duration positioning, focusing instead on generating performance via yield.

Though we see little reason for any significant spread widening, we believe better opportunities in credit are available outside of corporates, particularly within some of the more niche asset-backed securities markets. Though spreads in these markets have also tightened significantly, the absolute yield levels still available cause these securities to appear attractive to us.

Why should investors consider investing in this fund?

Expected returns are higher than they have been in many years. With economic growth slowing and an aggressive Federal Reserve working to bring inflation down, high quality fixed income should be an attractive asset class. This fund’s conservative positioning should be beneficial in a more risk-averse economic environment.

Disclosures

An investor should consider a fund’s investment objectives, risks and charges and expenses carefully before investing or sending money This and other important information about an investment company can be found in the fund’s prospectus. To obtain a Cavanal Hill Funds prospectus or summary prospectus, please call 800-762-7085 or visit us at www.cavanalhillfunds.com. Please read it carefully before investing.

Cavanal Hill Investment Management, Inc. is an SEC registered investment adviser and a wholly-owned subsidiary of BOK Financial Corporation, a financial holding company (“BOKF”). BOKF, NA serves as the custodian for the Cavanal Hill Funds. Cavanal Hill Investment Management, Inc. provides investment advice, administration and other services for the Funds and receives a fee for providing such services as fully described in the prospectus. The Funds are distributed by Cavanal Hill Distributors, Inc. a registered Broker/Dealer, member FINRA and wholly-owned subsidiary of BOKF.

Commentary provided is for the indicated period and is designed to provide a frame of reference. It does not constitute investment advice. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. The opinions expressed herein reflect the judgment of the authors at this date and are subject to change without notice and are not a complete analysis of any sector, industry or security. This document contains forward-looking statements that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the Cavanal Hill Funds, the securities and credit markets and the economy in general. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “plans,” “projects,” variations of such words and similar expressions are intended to identify such forward-looking statements. Management judgments relating to and discussion of the value and potential future value or performance of any security, group of securities, type of security or market segment involve judgments as to expected events are inherently forward-looking statements. Management judgments relating to and discussion of the value and potential future value or performance of any security, group of securities, type of security or market segment involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what is expressed, implied, or forecasted in such forward-looking statements. The potential realization of these forward-looking statements is subject to a number of limitations and risks, which are described in the Fund’s prospectuses, and investors or potential investors, are cautioned to review the Funds’ prospectuses and the description of such risks. Neither the Funds nor the Funds’ investment adviser, Cavanal Hill, undertake any obligation to update, amend, or clarify forward-looking statement, whether as a result of new information, future events or otherwise.

Investment Risks

Fixed income securities are subject to interest rate risks. the principal value of a bond falls when interest rates rise and rise when interest rates fall. During periods of rising interest rates, the value of a bond investment is at greater risk than during periods of stable or falling rates. Bond funds will tend to experience smaller fluctuations in value than stock funds. However, investors in any bond fund should anticipate fluctuations in prices, especially for longer-term issues and in environments of changing interest rates.

If you’d like additional information about this or any of the Cavanal Hill Funds, please contact Craig McQueen at 303.355.2799, CraigMcQueen@cavanalhill.com, or cavanalhillfunds.com.

Not FDIC Insured | May Lose Value | No Bank Guarantee

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