Also, last month’s selling in muni bonds needs some context. “March has been the worst-performing month for municipal bonds for years, producing positive returns only five times since 1990,” Barron’s reported. “Investors often sell munis ahead of April’s tax deadline, while March sees comparatively few maturing bonds that generate proceeds in need of reinvestment. Hence, the typical slump.”
Muni bond ETFs haven’t seen large outflows yet, so these investors appear to be staying put despite the recent price swings.
“The exponential growth of exchange traded funds in recent years has resulted in a plethora of ETF offerings in virtually every sector and asset class, and municipal bonds have been no exception,” writes Mark Cussen for Investopedia.
“These versatile instruments have become popular with investors in higher tax brackets and fill a specific niche in the wide selection of fixed-income offerings that are now available,” he added. “Many fixed-income investors who sought tax-free interest in the past through individual municipal securities will find municipal ETFs to be attractive alternatives in several respects.”
iShares S&P National AMT-Free Municipal Bond Fund
