These funds can juice your tax-free portfolio income. Just be sure to mind the risk
Source: CNBC ·
A bout of volatility has hit the price of municipal bonds, but there are solid buying opportunities available — including one high-yielding corner.
From the source
The recent run-up in rates has dented municipal bond prices, leaving one corner of the market offering especially attractive tax-free income. Municipal bonds posted a negative return of 6.35% in the third quarter, the worst quarter since 1981, according to Nuveen. This was largely driven by a sharp spike in rates rather than credit deterioration, the firm found. Bond yields and prices move in opposite directions, so even as prices took a hit, income generation was on sale. At around the start of October, the yield on the Bloomberg Municipal Bond Index reached 4.78%. "What that's provided, in our view, is a very good opportunity set," said Dan Close, head of Nuveen Municipals. "It's almost impossible to call the absolute bottom, but if you can pick up the rates we get right now, you're certainly being paid to wait." He added that the "higher for longer" theme for interest rate policy has returned as market expectations point to a greater likelihood of the Federal Reserve raising rates…