Chart: What drives return in the muni market
- Chart on the Go
The latest #chartonthego highlights the primary sources of return in the municipal bond market over the past decade.*
- Duration risk and credit risk are the primary drivers of income and total return in the muni bond market. These factors may outperform at different stages of the economic cycle.
- Allocating across maturity and quality spectrums could uncover more opportunities. Shorter duration, high-quality municipal securities could offer stability during periods of heightened volatility. But longer and lower quality bonds could provide a significant yield advantage that bolsters total return potential. Blending these exposures with a core allocation to bonds of targeted maturities and qualities may smooth the ride for investors.