All things considered, the municipal bond market had an exceptional 2020.
In a year in which municipalities were faced with an economic crisis that had some investors concerned about defaults, the VanEck Vectors CEF Municipal Income ETF rose 3.44% in 20201, a stunning turnaround given its sharp decline during March.
Muni bond investors have several tailwinds to thank for that rebound, according to VanEck Senior ETF Product Manager Michael Cohick: a supply-demand imbalance driven by fewer bond issuances, the realization that municipalities are in a better position than the financial crisis of 2008, and the Federal Reserve, whose municipal liquidity facility acted as a lender of last resort.
Benzinga
by Spencer Israel
January 29, 2021