I offer up this comment to suggest that while these terms have merit, I believe that there is danger in accepting the face value of these concepts, especially out of context of the longer view of an asset allocation strategy using tax-exempt bonds. For investors in tax-exempt products, one must remember that since personal income taxes have risen, the value of the exemption might mean more now than it did when purchased over the past several years.
Furthermore, the debate should, in my opinion, focus less on whether prices have truly risen “far beyond their true values” and focus more on the fact that this asset class delivers what I consider a greater benefit of credit quality and stability in an increasingly volatile marketplace.
James Colby is a portfolio manager and senior municipal strategist at Market Vectors ETFs.
*Investopedia