Displaying items by tag: munis

Monday, 29 September 2025 09:10

Muni’s Catch Investors Eye as Rate Cuts Hit

The Fed’s latest 25 basis point rate cut was widely expected, but uncertainty lingers over how aggressive or conservative future policy will be. While the Fed currently projects only one cut in 2026, that could shift depending on economic data, leaving investors cautious on yield. 

 

This makes high yield municipal bonds an option worth considering, given their tax advantages and potential return relative to corporates. An active fund like the Invesco Rochester High Yield Municipal ETF (IROC) offers exposure with a 30-day SEC yield of 4.69% and a 12-month distribution rate of 4.43%. 

 

Active management is key in this space, as it allows portfolio managers to adapt holdings to evolving conditions and manage risk. 


Finsum: Taking an active approach when you can see the macro uncertainty start to creep up is a good strategy in fixed income. 

Published in Wealth Management
Thursday, 04 September 2025 06:23

Active Muni’s Funds Present Tax Advantages

Municipal bonds are drawing increased attention as investors seek stability amid equity market uncertainty, with recent volatility making tax-exempt yields more attractive on both an absolute and relative basis. Despite negative year-to-date returns across much of the muni market, relative valuations compared to taxable fixed income suggest excess return potential ahead. 

 

Longer duration exposure gives munis sensitivity to interest rate changes, and if the Federal Reserve moves toward cuts later this year, investors could benefit from both quality and yield opportunities. 

 

American Century offers strategies like TAXF and CATF that combine diversification, credit research, and active management, while also providing tax efficiency within an ETF wrapper. For California investors in particular, CATF can deliver taxable-equivalent yields above 8%, highlighting the value of tax-exempt strategies in high-bracket states. 


Finsum: Active management adds further advantages, including the ability to navigate sectors and credit qualities excluded from passive indexes.

Published in Wealth Management
Monday, 28 July 2025 07:46

The Present State of Munis

So far in 2025, investment-grade bonds have generally delivered modest gains, but municipal bonds have bucked the trend with disappointing performance. The iShares Core U.S. Aggregate Bond ETF (AGG) returned 2.85% through mid-June, while the iShares National Muni Bond ETF (MUB) declined by 1.29%, despite their similar credit quality and low fees. 

 

One key difference lies in liquidity: municipal bonds are often held long-term, making them harder to trade, with wide bid-ask spreads that erode value during redemptions. Outflows from MUB and uncertainty around tax policy, especially the fate of the 2017 tax cuts, may also be pressuring muni prices. 

 

For investors in high tax brackets, limited allocations to diversified, low-cost muni funds may still be warranted, but caution is advised, and exposure should generally stay under 20% of fixed income holdings.


Finsum: Structural issues, like the possibility of reduced federal funding for states and large unfunded liabilities, further cloud the muni bond outlook.

Published in Wealth Management

BlackRock just gave its muni bond lineup a jolt by flipping its High Yield Municipal Fund into a fresh, actively managed ETF: the iShares High Yield Muni Active ETF (HIMU), now trading on the CBOE. This fund isn’t your average sleepy muni play—HIMU is chasing juicy, tax-free income in today’s high-rate world, with a lean 0.42% net expense ratio after a fee trim. 

 

It's diving deep into the high-yield pool, with at least 65% of its assets in bonds rated BBB or lower—and yes, there’s room for up to 10% in distressed debt if the upside looks good. BlackRock’s betting that active management gives it the edge, letting it pounce on market moves that passive funds might miss. 

 

HIMU is the latest in BlackRock’s growing arsenal of bond ETFs, aiming to deliver alpha with a punch of flexibility and tax-free appeal.


Finsum: The launch comes as muni bonds are heating up again, with investors and advisors hunting for income and stability in a volatile environment.

Published in Wealth Management
Saturday, 15 February 2025 05:59

New Year, New Administration, Changes to Munis

The municipal bond market experienced fluctuations in 2024, with tax-free yields rising in response to Treasury yield movements, particularly in the latter half of the year. Market uncertainty increased following the Federal Reserve’s December rate cut, which coincided with ongoing inflation concerns and economic crosscurrents. 

 

As 2025 begins, the potential extension of 2017 tax cuts under the new administration may impact demand for tax-free bonds, particularly if corporate tax rates are lowered. Climate-related risks, such as the LA fires and hurricanes, have drawn attention to municipal finance, with increased insurance costs and resilience measures potentially leading to more bond issuance. 

 

Despite these pressures, municipal credit quality remains stable, supported by strong reserves, prudent budget management, and infrastructure reinvestment. However, challenges persist in certain sectors, including healthcare, higher education, and public K-12 schools, due to shifting demographics, rising costs, and expiring pandemic aid.


Finsum: These are important things to monitor for municipal bonds, and the increasing role of DOGE, could drastically change this bond segment. 

Published in Bonds: Munis
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