Skip to content

CONTRIBUTORS

Rick Polsinello, CIMA®

Senior Market Strategist,
Franklin Templeton Institute

Lukasz Labedzki, CFA

Senior Analyst
Franklin Templeton Institute

Key takeaways

We believe that the current market conditions are favorable for tax-free municipal bonds, and that their characteristics warrant a place in most retail investors’ investment portfolios.

  • Municipal bonds offer the appeal of relatively high tax-exempt income.
  • This subsector of fixed income historically has also offered high-credit quality relative to other sectors.
  • Muni bonds can act as an important diversifier for equity allocations.

Read the full paper to explore these themes as well as recent issuance trends in the municipals sector.

WHAT ARE THE RISKS?

All investments involve risks, including possible loss of principal.

The allocation of assets among different strategies, asset classes and investments may not prove beneficial or produce the desired results.

An investor may be subject to the federal Alternative Minimum Tax, and state and local taxes may apply.

Fixed income securities involve interest rate, credit, inflation and reinvestment risks, and possible loss of principal. As interest rates rise, the value of fixed income securities falls.

Low-rated, high-yield bonds are subject to greater price volatility, illiquidity and possibility of default.

To the extent the portfolio invests in a concentration of certain securities, regions or industries, it is subject to increased volatility.

IMPORTANT LEGAL INFORMATION

This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice.

The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market.

Data from third party sources may have been used in the preparation of this material and Franklin Templeton Investments (“FTI”) has not independently verified, validated or audited such data. FTI accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments opinions and analyses in the material is at the sole discretion of the user.

Products, services and information may not be available in all jurisdictions and are offered outside the U.S. by other FTI affiliates and/or their distributors as local laws and regulation permits. Please consult your own professional adviser or Franklin Templeton institutional contact for further information on availability of products and services in your jurisdiction.

Issued by Franklin Templeton Investments (ME) Limited, authorized and regulated by the Dubai Financial Services Authority. Dubai office: Franklin Templeton Investments, The Gate, East Wing, Level 2, Dubai International Financial Centre, P.O. Box 506613, Dubai, U.A.E., Tel.: +9714-4284100 Fax:+9714-4284140.

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.