Investors’ appetite for municipal bonds soared last year, helping push already low muni yields even lower.
Municipal-bond funds saw record inflows in 2019, as investors poured a massive net $105.5 billion into muni open-end mutual funds and exchange-traded funds during the year. That amount dwarfed the annual gains of each of the past 25 years, including the group’s previous boom year of 2009, which brought in roughly $75 billion.
Demand remained high throughout the year, as muni funds saw 12 straight months of net inflows over $5 billion, and by midyear had gathered 10 times the assets that flowed into those strategies in all of 2018.
Roughly 90% of 2019’s flows went into actively managed mutual funds, yet a substantial $8.7 billion went to passive strategies, mainly muni ETFs, which have continued to gain prominence since they first arrived on the scene in 2000.
Morningstar
by Elizabeth Foos
Jan 27, 2020