Vanguard Tax-Exempt Bond ETF·Financial Services

Bloomberg's Aashah Shah joins Scarlet Fu on "Bloomberg Real Yield." May has been a strong month for muni bond issuance, with about $35 billion of sales so far this year.

There is an old saying in investing that a portfolio is like a bar of soap: the more you touch it, the smaller it gets.

High-bracket retirees face a math problem that taxable bond funds cannot solve: every dollar of interest income gets taxed at the federal marginal rate, often layered with a state tax bite.

For investors in the top federal tax bracket, the Invesco National AMT-Free Municipal Bond ETF (NYSEARCA:PZA | PZA Price Prediction) offers something rare: a monthly paycheck the IRS cannot touch.

March's bout of geopolitical volatility affected investment approaches of all kinds, and municipal bonds were unfortunately no different. As just one example, the Bloomberg Municipal Bond Index fell more than 2% on the month, as the fixed income asset struggled to retain its safe haven reputation.

AI-driven electricity demand is forcing a decade of infrastructure spending into five years. The municipal bond market is becoming a primary financing channel for that buildout, creating income opportunity.
The investment objective of this index fund is to seek to track the performance of a benchmark index that measures the investment-grade segment of the U.S. municipal bond market. The fund employs an indexing investment approach designed to track the Standard & Poor’s National AMT-Free Municipal Bond Index using a sampling technique to closely match key benchmark characteristics. All of the fund’s investments will be selected through the sampling process, and at least 80% of the fund’s assets will be invested in securities held in the index. Under normal circumstances, at least 80% of the fund’s assets will be invested in securities whose income will be exempt from federal income taxes and the federal alternative minimum tax. Risks of the fund include the fact that changes in interest rates can affect the fund by resulting in lower bond prices (when interest rates go up) or an eventual decrease in income for the fund (when rates decline). Investors who are looking for a fund that may provide federal tax-exempt income and can tolerate moderate price and income fluctuations may wish to consider this fund.With respect to 75% of its total assets, the fund may not: (1) purchase more than 10% of the outstanding voting securities of any one issuer or (2) purchase securities of any issuer if, as a result, more than 5% of the fund’s total assets would be invested in that issuer’s securities; except as may be necessary to approximate the composition of its target index. This limitation does not apply to obligations of the U.S. government or its agencies or instrumentalities.
Financial Services
Asset Management
2015-08-25
0.95
Market Peers