I believe the near-term outlook for municipals continues to build a positive narrative, as investible cash from maturities, bond calls and coupon payments should, in my opinion, prime demand.
Now that we have personal income tax payments in our rear-view mirror, investors can again focus on the fundamentals which I believe continue to argue for municipals as a positive income generator with generally high credit quality and potentially less volatility than some other fixed-income options. Lake Wobegon doesn’t sound so bad after all.
Market Vectors Intermediate Municipal ETF (NYSEArca: ITM)
James Colby is a portfolio manager and senior municipal strategist at Market Vectors ETFs.
1Source: Moody’s. The Moody’s rating scale is as follows, from excellent (high grade) to poor (including default): Aaa to C, with intermediate ratings offered at each level between Aa and Ca. Anything lower than a Baa rating is considered a non-investment-grade or high-yield bond.
2Source: Barclays. Based on the Barclays Municipal Bond Index which is considered representative of the broad market for investment-grade, tax-exempt bonds with a maturity of at least one year.