Municipal bonds have been a great source of tax-exempt income for many investors, but the fragmented nature of the muni market makes it difficult to effectively capture the full opportunity.
On the upcoming webcast Thursday, Oct. 25, Finding Income Where Muni Benchmarks May Not, Catherine Stienstra, Head of Municipal Bond Investing at Columbia Threadneedle Investments; Edward Kerschner, Chief Portfolio Strategist for Columbia Threadneedle Investments; and Jay McAndrew, National Sales Manager for Strategic Beta at Columbia Threadneedle Investments, will dive into the municipal debt market and consider ways to optimize muni bond exposure by diversifying across specific segments.
Specifically, potential muni bond ETF investors may look to the recently launched Columbia Multi-Sector Municipal Income ETF (NYSEArca: MUST).
The Columbia Multi-Sector Municipal Income ETF tries to reflect the performance of the Beta Advantage Multi-Sector Municipal Bond Index, which is comprised of state or local government debt whose interest is exempt from U.S. federal income tax and follows a rules-based, multi-sector strategic beta approach to measuring the performance of the U.S tax-exempt bond market.
The smart-beta, multi-sector approach is represented by five sectors of the municipal debt market, with a focus on yield, quality, maturity, liquidity, and interest rate sensitivity.
The five sectors include the Municipal Core Revenue Sector at 45%; health care-related debt or the Municipal Health Care Sector at 20%; high quality revenue bonds or the Municipal High Quality Revenue Sector at 15%; general obligation (GO) bonds or the Municipal Core GO Sector at 10%; and high yield debt or the Municipal High Yield Sector at 10%. The first four segments are component bonds taken from a subset index or indices of the Bloomberg Barclays Municipal Bond Index.
MUST excludes California bonds, Guam bonds, Puerto Rico bonds, U.S. Virgin Island bonds, other U.S. territories, commonwealths and possessions, pre-funded bonds, insured bonds, floaters, callable bonds with less than 1 year to call, tobacco bonds, and derivatives.
Financial advisors who are interested in learning more about the municipal bond market can register for the Thursday, October 25 webcast here.