State Borrowing at 10-Year High, But Muni ETFs Still Going Strong January 13, 2021
The municipal bond market is experiencing a boom as more states seek to capitalize on low rates to issue new debt to cover rising costs. Municipal bond exchange traded funds continue to strengthen as income hunters look for more attractive yield-generating assets in a lower-for-longer rate environment.
Over the past three months, the
SPDR Nuveen Bloomberg Barclays Municipal Bond ETF (NYSEArca: TFI) was up 1.9%.
According to Refinitiv data, muni bonds for new projects hit $252 billion in 2020, after municipal bond issuance in 2020 was at its highest in a decade. The new borrowing put the total amount of outstanding municipal debt above $3.9 trillion for the first time since 2013, the Wall Street Journal reports.
Here’s a quick primer on how the three ETFs might fit into your bond portfolio:
TIP: seeks to track the investment results of Bloomberg Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index (Series-L) which composed of inflation-protected U.S. Treasury bonds. While the Federal Reserve appears unflinching when it comes to its stance to keep interest rates low, what will it do if inflation starts to rise? With the increased flows into TIPS to start 2021, investors and traders alike might be sensing that a healing economy will translate into higher inflation in the new year.
IGSB: With its low 0.06% expense ratio, IGSB seeks to track the investment results of the ICE BofA 1-5 Year US Corporate Index. The fund generally invests at least 90% of its assets in securities of the underlying index. The underlying index measures the performance of investment-grade corporate bonds of both U.S. and non-U.S. issuers that are U.S. dollar-denominated and publicly issued in the U.S.
Examining Municipal Bond ETFs in Conservative Income Portfolios etftrends.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from etftrends.com Daily Mail and Mail on Sunday newspapers.