The increased flows into the munis market is attributed to ongoing concerns about the slow pace of global growth and prospects of an extended low interest-rate environment, especially after the recent disappointing jobs report.
Moreover, low and even negative yields on global government bonds have made U.S. assets, including munis, increasingly more appealing relative to other fixed-income assets. For example, foreign investors have increased the amount of municipal debt they hold by 44% to $85 billion from 2009 through 2015, according to the Federal Reserve.
“Mutual fund flows jumped by nearly $3 billion, reports BofA Merrill Lynch Global Research. Meantime, issuance in June through the ninth was $18.4 billion, up by 46.3% compared to the same period last year, analysts report,” adds Barron’s.
For more information on the munis market, visit our municipal bonds category.
iShares National AMT-Free Muni Bond ETF