“In those periods where the market sells off, I would view those as an opportunity to put some money to work and buy,” Peter Hayes, head of municipal bonds at BlackRock (NYSE: BLK), said in the WSJ article.
Moreover, Hayes argues that munis are relatively inexpensive relative to other fixed-income assets, like Treasuries and corporate debt, even after the impressive rally last year.
Municipal bonds also offer investors favorable tax advantages as muni investors do not pay federal income taxes on interest payments. Additionally, munis issued from an investor’s home state do not come with state income taxes on interest as well. Consequently, muni bonds typically yield more attractive tax equivalent yields. For instance, SHM has a 1.41% taxable equivalent 30-day SEC yield for those in the highest income bracket.
For more information on the munis market, visit our municipal bonds category.
Max Chen contributed to this article.