(March 2021)

Even before the pandemic and subsequent crisis, the high-yield Muni market failed to deliver the returns after taxes that the corporate bond market did despite most being tax-exempt for investors. However, David Hammer, Exec Vice President of Pimco sees a different direction for muni’s moving forward.  Hammer says he sees high-yield muni’s value on the rise as tax collection holding increased in 2020 and a perception of less risk in muni’s. Hammer helps run Pimco’s High Yield Muni Bond fund (PHMIX), which has generated a 5-year annual return of 5.82% and ranks among the top 10% for its Morningstar category. PYMAX is another Pimco muni fund that has a lower $1,000 minimum investment. Hammer says he looks for bonds that are “resilient and have secured cash flows, and we can expect spreads to compress further.” Modern high-yield bonds aren’t all funding local governments; many are profitable private companies that are making public goods, such as airlines.

(New York)

FINSUM + Magnifi: Muni’s are trading at a discount right now. Many projects are essentially corporate bonds with less risk and tax exemption. 


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