Investors have had a nice four-year run in municipal bonds. Since the start of 2000, national long-term muni bond indexes have returned 8.5 percent annualized.
The Investment Company Institute has reported $119 billion of cumulative net inflow into tax-exempt mutual funds over this period, bringing assets to a record $840 billion. Tax-exempt closed-end funds have grown to $90 billion, and the tax-exempt ETF universe has expanded to 30 funds with more than $8 billion.
As millions of retiring baby boomers search for yield while the Fed keeps holding interest rates low, munis are riding a wave of momentum. Affluent investors also are motivated by fears of rising taxes, including a new 3.8 percent Unearned Income Medicare Contribution Tax (UIMCT) that began on 1/1/13. For high-income taxpayers, UIMCT will redraw Taxable Equivalent Yield tables, making municipals even more attractive.
Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
