Sunday, 31 July 2022 14:25

Markets May be Overlooking Muni Bond Funds

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With yields rising it may be time to start paying attention to muni bonds again. The double tax efficiency with tax-exempt bonds and efficient ETFs give an additional return edge. In addition to this, there is a flight to safer assets because of all the market volatility currently, and muni bonds provide that much-needed safety investors are looking for that high-yield corporate or emerging market debt can’t compete with. Vanguards Tax-Exeempt Bond ETF (VTEB) is one of the most popular Muni Bond ETFs, with over 4/5ths of its holdings in Federally tax-exempt bonds. Fidelity’s Tax-Free Bond Fund (FTBAX) offers similar objectives and also invests in using a leveraging technique that can amplify the returns or losses. BlackRock (BATEX) offers a fund with junk exposure, by investing up to 10% in distressed muni’s that could provide higher returns with more risk.

Finsum: Muni’s offer a competitive option to government debt, and with rising yields, they are beginning to look attractive.

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