Municipal bonds not only offer solid, tax-free income — they should also see some capital appreciation later this year, according to UBS.
Consumers are still spending and the combination of job growth, higher wages and slowing inflation should continue to push households' real disposable income higher, he added.
Further, the longer end of the muni bond yield curve is also starting to look attractive, he said.
Investors hoping to take a diversified approach to municipal bonds may want to consider an exchange-traded fund.
Schwab's Municipal Bond ETF (SCMB) , which has an expense ratio of 0.03% and a 30-day SEC yield of 3.25%.
Persons:
Sudip Mukherjee, Mukherjee, Bonds
Organizations:
UBS, muni, Index Fund, SEC, Schwab's Municipal Bond ETF