2024-01-26 07:00:00 ET
Summary
- Municipal bond closed-end funds (CEFs) are recommended as a top trade idea for 2024, offering the potential for high total returns in a relatively safe asset class.
- Muni CEFs provide the opportunity for equity-like returns with lower risk compared to stocks, particularly for investors in higher tax brackets.
- Interest rate risk in bonds is temporary, and longer-maturity municipal bonds have been undervalued due to recent interest rate movements, presenting a good opportunity for investors.
- For investors who are in the top couple of tax brackets for their marginal rates, this is a no-brainer. The tax equivalent yield is almost 8.5%, which is equity-like returns.
- Today, according to RiverNorth, the discounts are in the widest 2% of observations going back to 1996. In other words, 98% of the time, the discounts are tighter.
This is the first in a series of reports where we will detail why we like municipal bond closed-end funds ("CEFs") as our trade for 2024. Stay tuned for additional articles.
What if I told you that those of you in the higher tax brackets (22% and up) can get equity-like returns while taking much less risk by investing in municipal bonds?...
Read the full article on Seeking Alpha
For further details see:
Nuveen High Yield Muni: Generational Opportunity In Muni CEFs