Municipal bond ETFs have been standout performers in the fixed-income market this year and are gathering steam heading into 2013 on expectations tax rates will rise and make the asset class even more attractive.
Take the Market Vectors High Yield Municipal Index ETF (HYD) , which holds more than $1 billion in assets and has rallied to an all-time high. The ETF is up nearly 20% over the past 12 months with investors scouring the bond market in 2012 for income with 10-year Treasury note yields below 2% for most of the year. [Muni Bond ETFs at Record Highs]
The muni bond fund pays a 12-month yield of 4.87% with the added bonus that the income is tax-exempt for taxable accounts.
Tomorrow, Wednesday Dec. 5, I’ll be moderating a panel discussion and webcast featuring:
- Jim Colby, Senior Municipal Strategist/Portfolio Manager, Market Vectors ETFs
- Philip Fischer, Managing Principal, eBooleant Consulting, LLC. Fischer is the former head of Municipal Bond Research and the Global Index System at Bank of America Merrill Lynch. He is a nationally recognized expert on fixed-income instruments, economic and market analysis, and risk management.
Topics to be discussed include:
- Will the rally continue on expectations of rising taxes?
- Where are the best opportunities through the end of the year and into 2013?
- What can investors do to help protect their investment gains?
- Will the tax-exempt status survive the Fiscal Cliff?
Click here to register for the webcast, Muni Opportunities and Threats as the Fiscal Cliff Looms. The webcast starts at 4:15 pm ET on Wednesday, Dec. 5. One hour of CFP CE Credit is approved. Also, 1 CIMA CE credit has been approved. A copy of Dr. Fischer’s book Investing in Municipal Bonds will be given to 10 advisors who complete our survey.
In a recent blog post, Colby at Market Vectors said the municipal market continues to be well-bid by evidence of continued strong flows into muni funds.
“I believe we can expect the demand side of the equation to drive the market through year-end,” Colby wrote. “Amidst all the talk about the fiscal cliff, it seems to me that concern for higher personal tax rates in 2013 is bolstering the attractiveness of municipal bonds. Additionally, the potential impact of a higher capital gains rate could be seen as enticing investors to seek shelter in municipal bond ETFs.” [Muni Bond ETFs: Who's Afraid of the Fiscal Cliff?]
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.