Displaying items by tag: munis

Wednesday, 04 August 2021 22:57

Watch Out for this Big New Risk to Munis

(New York)

Munis have had a great year. Ever since Biden’s election, munis have surged in value because of two core assumptions. The first, and by far the biggest, is that taxes were likely to rise with Democrats in power. The second is that the Democrats would be more financially supportive of states and local governments. In the immortal words of Lee Corso, we’re here to say “not so fast!”. The assumption that taxes are going to rise looks weaker and weaker, and the same goes for the financial support for states.


FINSUM: The Democrats were not able to force through tax rises alongside this major infrastructure package, and their chances of getting any tax hikes through before the midterm elections looks poor.

Published in Bonds: Munis
Wednesday, 07 July 2021 18:05

Munis Have a Big Cataclysm Looming

(New York)

When you think of all the risks and all the opportunities for the muni market right now, you might be missing one of the very biggest. While a lot of talk has focused on how Biden and the Democrats—and their respective tax packages—could help muni finances, the reality is the drought out West is a big risk to the muni market. 75% of the West is in an extreme drought right now, representing almost 60m Americans. If that continues it could significantly impact muni finances.


FINSUM: Only 26% of the muni market lies in the drought area, which mitigates systemic risk, but very issuers could be badly hit. Be careful of large muni holdings in drought-stricken areas.

Published in Bonds: Munis

Infrastructure investment has changed vastly in the last few years. Not only is the sector at...see the full story here

Published in Bonds: Munis

(New York)

The municipal bond demand has spiked to a near all-time high. Prices are indicative of that, but…see the full story on our partner Magnifi’s site

Published in Bonds: Munis

Infrastructure investment has changed vastly in the last few years. Not only is the sector at the epicenter of Biden’s stimulus packages, but “infrastructure” has evolved beyond the traditional view of buildings and transportation. Infrastructure investment now refers not only to road and rail—the literal backbone of 20th century development—but also to emerging global themes like decarbonization, clean water, and digital transformation. Further, infrastructure investment has expanded from municipal bonds to equities and other fixed income solutions. As in the past, there continue to be compelling reasons why an allocation in infrastructure makes sense for today’s portfolios:
• Consistent and stable return profile
• Strong portfolio diversifier.
• Focus on essential assets.

Why Now?

President Biden has put America’s aging infrastructure at the center of his presidency and there is a major infrastructure bill moving through Congress which we believe would provide unprecedented opportunity for investment in the sector.
But what is the best way to invest in infrastructure?

Essentially there are three routes. First, through globally listed infrastructure, which is currently trading very favorably levels*. For example, P/E ratios for infrastructure equity investments are well below those of other comparable investment profiles. Take a look at the MainStay CBRE Global Infrastructure Fund (VCRIX), a Lipper Award winning fund, to learn more.

Second, tax exempt muni bonds can be a strong and traditional option. Three-quarters of all infrastructure funding is provided by muni bonds, and the sector has generally had fewer credit downgrades than the bond market as a whole, largely because of the “essentiality” of the services that municipal issuers provide. For example, the provision of water, power, and education have not been greatly affected by recessions. An option for infrastructure investment via tax exempt muni bonds consider the IQ MacKay Municipal Intermediate ETF (MMIT), a highly rated fund by Morningstar.

Third, taxable muni bonds are an increasingly popular option which fulfil an important role in the ecosystem. Their issuance has surged since their effective inception in 2008 via Build American Bonds after the global financial crisis. They consist of largely the same issuers, but their taxable status means they can be utilized in areas where conventional muni bonds largely have not, such as qualified plans, pensions, endowments, and foundations. Check out the MainStay MacKay U.S. Infrastructure Bond Fund (MGOIX).


*Source: CBRE Clarion as of 3/31/21
All investments are subject to market risk, including possible loss of principal. Diversification does not ensure a profit or protect against a loss in a declining market.

Click on the fund name for the most current fund page, which includes the prospectus, investment objectives, performance, risk, and other important information. Returns represent past performance, which is no guarantee of future results. Current performance may be lower or higher. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.

Please ask your clients to consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus and, if available, the summary prospectus, contain this and other information about the fund and can be obtained by contacting you, the financial professional. Instruct your clients to read the prospectus or summary prospectus carefully before investing.

“New York Life Investments” is both a service mark, and the common trade name, of certain investment advisors affiliated with New York Life Insurance Company.

FOR REGISTERED REPRESENTATIVES USE ONLY - NOT FOR DISTRIBUTION TO CLIENTS OR TO THE GENERAL PUBLIC.

1903005

N.B. This is sponsored content, not FINSUM editorial.

Published in Eq: Growth
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