The Power of Tax-Equivalent Yield

While municipal bonds are well-recognized for their tax-exempt income generation, the potential magnitude of after-tax benefit can still go underappreciated by investors. In this commentary, we explore how municipal bond tax-equivalent yields expand in high rate environments, compare favorably against taxable fixed income alternatives, and can be further maximized through active management.
 

IN THIS ARTICLE:

• Tax-equivalent yield calculations are amplified by higher rates
• Tax-equivalent muni yields are attractive versus taxable alternatives
• Sourcing attractive municipal yields beyond the index