Muni Bond Strategies for a Low Interest Rate Environment | ETF Trends

With a low-interest rate environment anticipated ahead, certain municipal bond strategies are better positioned than others to benefit in this type of market cycle.

On the upcoming webcast, Muni Bond Strategies for a Low Interest Rate Environment, Samantha Azzarello, Vice President, Global Market Strategist, J.P. Morgan Asset Management; and Richard Taormina, Managing Director, Head of the Tax Aware Strategies Team, JP Morgan Asset Management will discuss the fixed-income market environment and explore muni strategies that offer a foundation of a well-diversified, tax-efficient bond portfolio.

For example, the actively managed JPMorgan Municipal ETF (Cboe: JMUB) could help investors better control their fixed-income duration exposure, with an underlying portfolio of intermediate-term muni bonds.

The JPMorgan Municipal ETF tries to provide monthly dividends and invest primarily in municipal obligations. The portfolio’s underlying holdings mainly consist of municipal securities that include variable rate demand obligations, variable rate demand preferred securities, short-term municipal notes, tax-exempt commercial paper, private activity and industrial development bonds, tax anticipation notes, bond anticipation notes, revenue anticipation notes or other short term notes, private placements and participation in pools of municipal securities.

The Right Allocation

While the majority of the underlying benchmark holds investment-grade muni debt, up to 10% of the fund may be tactically allocated toward below-investment-grade debt securities should opportunities emerge.

According to J.P. Morgan, JMUB emphasizes comprehensive risk/reward analysis to identify investments that may perform well over market cycles, and it seeks to maintain an average weighted maturity between three and ten years under most market conditions.

Additionally, investors can look to the actively managed JPMorgan Ultra-Short Municipal ETF (Cboe: JMST) to go down the yield curve and better manage rate risk. The JPMorgan Ultra-Short Municipal ETF tries to generate a high level of current income exempt from federal income tax as is consistent with the relative stability of principal. The portfolio primarily consists of investment-grade fixed, variable, and floating-rate municipal securities exempt from federal income taxes.

Financial advisors who are interested in learning more about the municipal bonds market can register for the Thursday, September 26, webcast here.