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☆ It’s prime time to lock in yields on this tax-free income play, UBS says
▼ + stars: | 2024-04-23 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +4 min

UBS doesn't see the Federal Reserve embarking on rate cuts until September — and that means now is the time to snap up tax-free municipal bonds. Bond yields and prices move inversely, so a decline in rates will come with price appreciation for the underlying issues. "Against that backdrop, we believe that yields on quality municipal bonds look attractive at current levels," wrote UBS Wealth Management senior municipal bond strategist Kathleen McNamara in a report last week. The kicker of tax-free income Muni bonds are generally backed by the full faith and credit of the issuer, which makes them less of a default risk compared with corporates. Large diversified municipal bond funds can be cheap, but state-focused funds tend to be a little more costly.

Persons: Kathleen McNamara, McNamara, FKTFX Organizations: UBS, Federal, UBS Wealth Management, Bond, SEC, Vanguard California, Franklin, Franklin California Tax, Income Fund, Muni Bond ETF, Vanguard New Locations: There's, New York , California, New Jersey, California, Franklin California

☆ These tax-free bonds could see stellar returns once the Fed starts cutting rates
▼ + stars: | 2024-03-07 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +4 min

Such a move would bode well for fixed income, including municipal bonds. Recent data from Columbia Threadneedle Investments and Bloomberg, shows that muni bonds can see a jump in cumulative tax-equivalent returns once the Fed begins cutting rates. When taking into account the tax savings, muni bond investors don't have to take that much risk to capture attractive yields. Rising flows and higher yields Investors have been pouring money into muni bond funds lately. BlackRock's iShares National Muni Bond ETF (MUB) , meanwhile, has seen an exodus of more than $1 billion in flows this year, but it experienced inflows of $150.9 million in the past week.

Persons: Jerome Powell, bode, munis, Catherine Stienstra, BlackRock's, Duane McAllister, Baird Organizations: Federal Reserve, Columbia Threadneedle Investments, Bloomberg, York Life Investments, Columbia, Bond, Muni Bond ETF, Baird Asset Management, AAA, BBB Locations: Columbia

☆ Bond yields will come down from their fever pitch in 2024. How to prepare your portfolio
▼ + stars: | 2023-12-05 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +5 min

Expect to work a little harder for those fixed income returns in the new year. As a result, it may be time to start unwinding those big cash positions and adopt a longer-term mentality for fixed income investments. A runup in bond yields is accompanied by a decline in prices, and the two move inversely to one another. The sector "remains well positioned to maintain its high credit quality, driven by solid state credit quality and strong state financial support, despite soft enrollment trends," analyst Kathleen McNamara wrote last week. Consider dollar cost averaging into those longer-dated positions, incrementally building up exposure to intermediate duration bonds.

Persons: Jerome Powell, it's, Kathy Jones, Shannon Saccocia, Jones, Nicholos Venditti, Kathleen McNamara, Schwab's Jones, Barry McAlinden, Michael Bloom Organizations: Schwab Center, Financial Research, Bond, SEC, Muni Bond ETF, Allspring Global Investments, UBS

☆ Turn to this high-quality income play for the new year, Wells Fargo Investment Institute says
▼ + stars: | 2023-11-23 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +4 min

Investors who hope to generate portfolio income while recession fears ramp higher can seek some safety in municipal bonds. Wells Fargo Investment Institute recently issued its fixed income guidance for 2024, forecasting "higher for longer" rates across the yield curve as the Federal Reserve remains vigilant to bring down inflation. Municipal bonds offer a combination of characteristics that appeal to investors: General obligation bonds are backed by the revenue of the municipality issuing them. "Going into a slowdown, you anticipate rates to fall," said Brian Rehling, head of global fixed income strategy at Wells Fargo Investment Institute. The top marginal income tax rate is 13.3% in California and well over 10% in New York and New Jersey.

Persons: Brian Rehling, Jennifer Johnston, Franklin Templeton, Johnston Organizations: Wells, Wells Fargo Investment Institute, Federal Reserve, Fargo Investment Institute, AAA, Muni Bond ETF, Vanguard, Bond, Fed, New York Life Investments, Investors, York State, Metropolitan Transportation Authority Locations: Wells Fargo, Fargo, New, California, New York, New Jersey, York

☆ Protect your portfolio income from hefty state taxes with these funds
▼ + stars: | 2023-10-26 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +4 min

Investors in high-tax locales can protect some of their portfolio income from steep levies by adding state-specific municipal bond funds to their fixed-income roster. "In the muni bond fund market, we're seeing yields higher than they have been in more than a decade," said Amy Arnott, portfolio strategist for Morningstar Research Services. That's because while muni bond income is generally free of federal taxes, it can also avoid state levies if the investor resides in the state where the bond was issued. That's where state-specific muni bond funds come into the picture. See below for a chart of 10 large state-focused muni bond funds.

Persons: Bonds, haven't, Amy Arnott, Dan Herron, Herron, Arnott, CNBC's Gabriel Cortes Organizations: Federal Reserve, Muni Bond ETF, Morningstar Research Services, Vanguard, SEC, Vanguard New, CPA, Wealth Advisors, muni Locations: California, New York, Massachusetts, Ohio, Jersey

☆ Get tax-exempt income on the cheap as bond shake-up hits munis
▼ + stars: | 2023-10-12 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +4 min

Tax-exempt income and relative safety are on sale for investors who are sniffing around municipal bonds. Tax-exempt income Interest income from municipal bonds is exempt from federal income tax — and can avoid state and local levies, too, if an investor and the bond issuer are in the same jurisdiction. This feature makes munis especially attractive to high-income investors in the 32% marginal federal income tax bracket and higher. Investors weighing a tax-exempt municipal bond against a corporate bond would do well to check out the tax equivalent yield. Schwab's Howard noted that the 5- to 7-year part of the municipal bond curve is favorable.

Persons: MUB, Nathan Will, Will, it's, Cooper Howard, Schwab's Howard, Shannon Saccocia Organizations: Federal Reserve, Muni Bond ETF, Vanguard, AAA, Bond, ., New York Life Investments, Schwab Center, Financial Research Locations: munis, muni

☆ BlackRock keeps pumping the brakes on a new fund amid state-level ESG criticism
▼ + stars: | 2023-08-24 | by ( Rebecca Ungarino | ) www.businessinsider.com time to read: +5 min

Last fall, BlackRock filed to launch an ESG municipal bond exchange-traded fund. It is in essence an ESG version of its major $32 billion municipal bond fund. The delay for the world's largest ETF provider has puzzled some in the industry. This year Goldman Sachs launched its first municipal bond ETF, which takes into account social and environmental factors. BlackRock's ESG municipal bond ETF has another wrinkle.

Persons: Larry Fink, Wesley Gray, Matthew Tuttle, they've, Goldman Sachs, Fink, Salim Ramji, Tony Kelly Organizations: BlackRock, Securities and Exchange Commission, SEC, HIP Muni Bond ETF, Alpha, Republican, Tuttle Capital Management, Goldman, HIP Investor, HIP Locations: York, Arizona , Texas, South Carolina, BlackRock, Connecticut

☆ Bank of America warns that the time-tested 60/40 portfolio strategy is on its deathbed — but you can still profit by making these 11 investments
▼ + stars: | 2023-06-21 | by ( James Faris | ) www.businessinsider.com time to read: +6 min

The 60/40 portfolio doesn't work anymore, according to Bank of America. If the 60/40 portfolio was on life support last year, this year its demise is now "confirmed," Woodard wrote. Bonds require 40% of the assets in a 60/40 portfolio but have delivered only 25% of the returns since 1920, he noted. Weak bond returns will lead to "another lost decade" for the 60/40 portfolio, in Woodard's words. For income, Bank of America's researchers unveiled a strategy called "dynamic prudent yield" that promises to beat bond indexes while carrying less risk.

Persons: Bonds, Jared Woodard, Woodard, Woodward, Schwab Organizations: Bank of America, Bank of, RSP, Vanguard, Energy, P Metals, Mining, Uranium, Research, Government Bond ETF, First Trust, Income, Muni Bond ETF, Muni, Blackstone Senior Loan, of America, Bond, SPDR Bloomberg Convertible Securities ETF, US, iShares, Securities ETF, VanEck Preferred Securities, Financials, Bloomberg, Treasury Bond ETF, Treasury

☆ Municipal bonds can offer your portfolio tax-free income and stability as recession fears loom
▼ + stars: | 2023-06-21 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +4 min

"People see [municipal bonds] as a defensive position for two reasons," said Shannon Saccocia, chief investment officer at NB Private Wealth. "Historically, municipal bonds have had low default rates," wrote Jared Woodard, investment and exchange-traded fund strategist at Bank of America, in a June 12 report. For instance, there's the Vanguard California Intermediate-Term Tax-Exempt Fund Investor Shares (VCAIX) and the Nuveen New York Quality Municipal Income Fund (NAN) . In select situations, some advisors are recommending closed-end municipal bond funds. Closed-end muni bond funds trading at a deep discount include the BNY Mellon Municipal Income (DMF) and the MFS High Income Municipal (CXE) .

Persons: Shannon Saccocia, Jerome Powell, Jared Woodard, Nisha Patel, Patel, Paul Winter Organizations: Bank of America, Bond, Muni Bond ETF, Vanguard, Income Fund, Five, BNY, Income Locations: York, BNY Mellon

☆ These ETFs could be winners if the Federal Reserve skips a rate hike
▼ + stars: | 2023-06-14 | by ( Jesse Pound | In Jesse-Pound | ) www.cnbc.com time to read: +4 min

But for investors worried that more Fed rate hikes in the coming months could tip the economy into recession, fixed income might be a more attractive bet. "Municipal bond issuers appear well poised to weather a possible recession in 2023/24. Bank of America has the equivalent of a buy rating on several municipal bond ETFs, including JPMorgan Ultra-Short Municipal Income ETF (JMST) and the iShares National Muni Bond ETF (MUB) . Some large funds that could fit that description include the iShares 3-7 Year Treasury Bond ETF (IEI) , the Schwab Intermediate-Term US Treasury ETF (SCHR) and the Vanguard Intermediate-Term Corporate Bond ETF (VCIT). The actively managed Flexible Income ETF (BINC) launched in May and has about $76 million in assets so far, according to FactSet.

Persons: Michelle Cluver, Andrew Slimmon, Slimmon, Russell, Jared Woodard, Woodard, Cluver, Rick Rieder Organizations: Federal, Global, Morgan Stanley Investment Management, RSP, Nasdaq, Bank of America, JPMorgan Ultra, Muni Bond ETF, Treasury Bond ETF, Treasury, BlackRock

☆ These short-term muni ETFs can give investors a healthy tax-free yield
▼ + stars: | 2023-03-30 | by ( Jesse Pound | ) www.cnbc.com time to read: +5 min

Municipal bond funds can be particularly attractive to investors who face a high tax burden, because their payouts are tax exempt. The new funds haven't been active long-enough to show an official yield, but the more established iShares Short-Term National Muni Bond ETF (SUB) has a tax-equivalent yield of 4.74%. Another factor in favor of municipal bonds is the uncertain economic environment and fear of a possible recession. The BulletShares fund family from Invesco offers several different muni funds with different maturity target dates for investors looking for more specific time-frames. That group expanded with the Invesco BulletShares 2032 Municipal Bond ETF (BSMW) , which launched on March 1.

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