Executive Summary:
- Negative rates among the developed world have helped bolster demand for positive yielding U.S. taxable municipal bonds, a smaller $622 billion segment of the $3.7 trillion municipal bond market.
- Less robust liquidity and more limited credit diversification remain key challenges.
- Growing U.S. infrastructure spending should lead to increased taxable municipal issuance, further expanding the investment opportunity and trading activity.
- In Standish’s opinion, an investment allocation to U.S. infrastructure via U.S. taxable and tax-exempt municipal bonds would help to maximize yield, liquidity and diversification in high quality assets.
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by Christine Todd, CFA – President of Standish and Head of the Tax-Sensitive and Insurance Strategies
September, 2016