In today’s era of automation, some situations demand a more active approach. Municipal bond investing is one.

Four strategies for navigating crosswinds in the municipal bond market.

Wholesale elimination of tax exemption isn’t likely, but certain types of muni bonds could be targets.

Candidate tax policies could affect municipal bonds, but the bigger picture is important too.

With high yields and compelling opportunities, we think the muni market looks exceptionally attractive today.

Higher coupons and interest payments can make premium municipal bonds worth the extra upfront cost.

Register now to join Matt Norton, AB’s CIO for Municipal Bonds, and Municipal Portfolio Manager Daryl Clements as they discuss how to best position muni portfolios in today’s environment.

It feels like Groundhog Day, with yet another challenging quarter for muni investors. The index was down about 4%, bringing year-to-date returns to –1.4% for the year. So what happened in August and September?

With the highest yields in years, the muni bond market looks increasingly attractive.

Investors are sitting on a mountain of cash as household reserves now stand four times higher than pre-COVID-19 levels, while money market reserves rose to all-time highs. However, a trifecta of concerns from rising interest rates, persistent inflation, and an evolving US tax picture are making investors reluctant to deploy that cash.

When rates are rising, investors need portfolio protection. But it’s no time to sit idly in cash and wait things out. Every day spent on the sidelines means income and opportunities lost. A passive, set-it-and-forget-it investing approach isn’t ideal either. Buy-and-hold laddered portfolios tend to lock in low yields that disappoint if the market begins to offer more.

There’s considerable uncertainty in today’s municipal market. Questions persist about the likelihood of rising interest rates, inflation that may not be transitory and the impact on municipalities once the benefits of fiscal stimulus fades. Active bond managers have many decisions to make and need to be nimble in a changing landscape. What’s next for municipal bonds, and how can trading and portfolio management technology help investors navigate this changing environment?

With the post-pandemic US economy on the mend, a new threat has emerged: inflation.

Municipal bonds have held up well this year, despite rising interest rates and inflation. Munis’ long-term outlook is strong too. What accounts for their outperformance in today’s environment?

Municipal bond issuers’ financial health and resiliency—which helped in 2020—should support opportunities for active muni investors in 2021.

What will a Trump or Biden win mean for munis? From taxes to infrastructure, the candidates differ—sometimes dramatically—on policy.

Municipal bonds—especially higher-quality issues—bounced back after a rough March. But not all munis have rallied. We see potential among overlooked mid-grade issues.

Are municipal bond issuers vulnerable to the COVID-19 pandemic? We assess key sectors, from states to hospitals to airports.

The outlook for the muni market is favorable for 2020, but investors should be prepared for twists and turns. Staying flexible can help keep investors on track.

The market is moving very quickly. I can’t say that there’s one aspect that we’re looking at, but one thing I will tell you that I do believe is that we’re a Tweet away from—fill in the blank. It’s just the world that we’re living in at this point.

Despite the municipal market’s strong year-to-date rally, an aging US expansion and low yields continue to top municipal investors’ concerns as we enter the home stretch of 2019. When conditions are evolving and visibility is limited, active and flexible strategies can help balance risk and reward.

Municipal bonds have had a good run since the beginning of the year, but there’s still room for additional positive performance in 2019. That’s particularly true for investors who choose active strategies with the flexibility to move money around the bond market as conditions evolve.

The financial industry and the muni market has lulled a generation of muni investors into using only one approach: buy and hold to maturity. That was fine in the past, but everything’s changed post-2008 and it’s time for a better muni strategy.

Municipal bond investors like their muni portfolios to play the role of Old Faithful in their overall asset allocation, providing safety and income. But that doesn’t mean that the investment environment is reliably the same. How can muni investors stay on track in 2019? They can adhere to these three strategies.

Should municipal bond investors be thinking about inflation protection? Without a doubt. But some inflation strategies are better than others. Choosing the right one could make all the difference.

US inflationary pressures are developing that could be destructive. Investors need to seek protection quickly. But how? For municipal investors, some inflation strategies fall short, leaving portfolios at risk.

They are the primary objectives of municipal bond investing: Safety. Income. After-tax return. But the market doesn’t always provide the ideal environment, and the coming year looks to be no exception. How can muni investors avoid getting knocked off course in 2018? They can adhere to these five strategies.

The Wall Street Journal published an article on January 7 challenging the safety of municipal bonds as “not [being] the reliable bet they once were.” While its headline may startle some investors, we’ve been endorsing this view for years. Municipal bonds simply aren’t a set-it-and-forget-it choice.

Cigarettes come with warning labels. Tobacco bonds should, too. These securities are highly volatile, and at current prices they have nowhere to go but down. There are healthier alternatives in the high-yield municipal bond market.

Changing the tax code is disruptive. Some of the proposals would affect the municipal bond market if they were to become law. But it’s far from certain they will. What should investors do? Keep their cool and see what develops. And we have one more piece of advice.

Now that talk of tax reform has taken center stage in Washington, the biggest concern for municipal investors is whether the upside of lower taxes could spell downside for their municipal bond valuations. The good news is that not every proposed change is likely to have a negative impact.

Passive strategies have gained ground in some asset classes. But when it comes to municipal bonds, they don’t have a leg to stand on. In a market this complex and illiquid, an active manager is essential.

Never before in the US have we experienced a natural disaster of the magnitude of Harvey. The damage is of such a degree that we find it nearly impossible to comprehend. Yet Harvey does not stand alone. Climate events that preceded it give us much-needed insight into how municipalities recover, and whether disasters precipitate credit defaults.

There’s a lot of uncertainty today for municipal bond investors: how do you hang onto the income you have in the face of rising rates and the potential for tax reform, and where should you look for more? We think muni credit is a good place to point the shovel.

Ignore your bond portfolio’s greatest enemy at your own peril. Inflation may not have been much of a concern for municipal bond investors in recent years, but it could well be in the cards now.

Trump? Clinton? We won’t call it. But we do have thoughts on the effect of the candidates’ proposals on the tax-exempt municipal bond market.