Sjoblom: I'm wondering too, how--in this current economic and political backdrop--how does that influence where you're putting money to work in, say, your big California fund?
Costas: Well, I'm glad you asked that because there's always a perception by more than a few people that funds that invest in, say, California, that's all they own: California GOs. You'd be surprised at how low the percentages are of California GO debt in our California funds. It is approximately 2% of our California Tax-Free Income Fund. People will think it's a lot higher than that, but there's a lot more to investing in California than just the state GO debt. We have already mentioned some of the types of credits. A lot of cities like San Francisco, Fresno, LA, Crescent City--all over the state, there are a lot of credits that are rated at the same level of California that don't come with the headache, that are not affected directly by the problems of the state, and you can buy them at the same or higher yields.
This is what I talked about earlier: Some of the perennial babies being thrown out with the bathwater. This is where it helps to be somebody like us, that has been around for 30 years now, that has a great research team whose job is to look around for opportunities, analyze opportunities like these that are brought to them by the portfolio managers, and say, you know, "This is actually fine," and you can pick it up for the same yield as California GOs or better and put it to work there.
That is exactly what we have been doing, and we have been finding a lot of opportunities, especially in the A and BBB sector, where the spreads are still pretty wide.