No Time for Passive: The Case for Active Muni Bonds | ETF Trends

The Fed has spoken, and their message is clear: not only will nominal interest rates remain low for years, real interest rates will likely remain negative for years. How do you generate income in this environment?

In the upcoming webcast, No Time for Passive: The Case for Active Muni Bonds, Samantha Azzarello, Executive Director, Global Market Strategist; J.P. Morgan Asset Management; and Richard Taormina, Managing Director, Head of the Tax Aware Strategies Team, J.P. Morgan Asset Management, will discuss an opportunity to deliver tax-exempt income while actively managing credit and duration exposures with a short duration munis strategy.

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.

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 municipal bond investments can register for the Wednesday, November 11 webcast here.