Adapting to a Changing Municipal Landscape
Individual investors and financial advisors building municipal bond portfolios on their own face challenges such as heightened credit risk, limited access to bonds, large markups, and volatile interest rates. Those who take this route often wind up with poor investment performance that’s exacerbated by lingering uninvested cash balances.
At the same time, new state and local tax deduction caps and changing tax rates have increased investor interest in tax-exempt interest income. This paper explores the reasons it’s important for investors to examine their tax-exempt allocations and explains how a professionally managed laddered approach to municipal bonds provides a structure that can reduce risk and combat rising interest rates.