Discover how to increase income from municipal bonds
- Muni bonds currently yield just 3.1%
- Investment strategists are finding ways to increase yields
- Stretching out maturities and using closed-end funds can boost income
- Muni closed-end funds are trading at unusually large discounts
- Active management and flexible strategies can take advantage of opportunities
- Rate risk in munis is asymmetric, favoring investors in a falling rate environment
Municipal bonds, while currently yielding just 3.1%, can still be a viable option for investors seeking tax-free income. Investment strategists have identified several ways to increase yields and make the asset class more attractive. One strategy is to stretch out maturities to the 12-18 year range, which offers more attractive spreads over Treasuries on an after-tax basis. Another approach is to utilize closed-end muni funds, which are currently trading at unusually large discounts to their net asset values. These funds can provide higher yields and potential gains when interest rates fall. Active management and flexible strategies are also recommended to take advantage of opportunities across the muni market. Additionally, rate risk in munis is asymmetric, favoring investors in a falling rate environment. By implementing these strategies, investors can maximize their yield potential and make the most of their muni bond investments.
Public Companies: iShares National Muni Bond (N/A)
Private Companies: TwinFocus Capital Partners, Matisse Funds, Academy Securities, BlackRock, Robinson Tax Advantaged Income
Key People: Paul Karger (Runs TwinFocus Capital Partners), Peter Tchir (Head of Macro Strategy at Academy Securities), Nisha Patel (Managing Director in the Municipal Bond Group at Parametric), Sean Carney (Head of Municipal Strategy at BlackRock), Jim Robinson (Runs Robinson Tax Advantaged Income fund)
Factuality Level: 7
Justification: The article provides information about municipal bonds and strategies to increase yields. It includes quotes from investment strategists and provides data on yields and discounts. However, it does not provide a balanced view and does not mention potential risks or downsides of investing in municipal bonds.
Noise Level: 4
Justification: The article provides information on investing in municipal bonds for tax-free income and explores different strategies to increase yields. However, it lacks scientific rigor and intellectual honesty as it does not provide evidence or data to support its claims. It also does not hold powerful people accountable or explore the consequences of decisions. Additionally, the article dives into unrelated territories by mentioning worries about overvalued stocks and the economy softening. Overall, the article contains some relevant information but lacks depth and evidence to support its claims.
Financial Relevance: Yes
Financial Markets Impacted: Municipal bond market
Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article discusses investing in municipal bonds and strategies to increase yields. It does not mention any extreme events or their impacts.
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