Bonds 2.0: new strategies for taxes, floating rates and more

A new ETF is trying to capture profits in the municipal funds space.

BondBloxx’s Joanna Gallegos is behind the IR+M Tax-Aware Short Duration ETF (TAXX) — which launched less than a month ago. 

“When you think about municipal bond portfolios, you really want people to think beyond them and look for the relative value of after-tax income,” the firm’s co-founder and COO told CNBC’s “ETF Edge” on Monday. 

Gallegos sees actively managed municipal bond exchange-traded funds as an income-generating opportunity in a high rate environment. She expects healthy returns even if the Federal Reserve starts to cut interest rates this year.

According to the BondBloxx website, almost 62% of TAXX’s holdings are in municipal bonds. Its five largest muni holdings by state as of Thursday were Illinois, Pennsylvania, New Jersey, New York and Alabama.

The ETF also includes exposure to corporate and securitized bonds. The firm states the fund’s mixed-bond approach presents a “wider opportunity” to increase after-tax total returns. FactSet describes the fund as “tax efficient” — balancing strong after-tax income opportunities with capital preserved through both municipal and taxable short-duration fixed income securities. 

“Right now, the portfolio’s tax-equivalent yield is close to 6%. It’s about 5.88 as you look at it,” Gallegos said. “It’s just the year to be thinking about taxes.” 

As of Friday, TAXX is down 0.2% since its March 14 launch date.

Disclaimer

Don’t miss these stories from CNBC PRO:



View Original Source Here

You May Also Like

AMC short sellers dealt massive $1.2 billion blow after weeklong stock rally

In this article AMC Street performers in Minnie Mouse costumes pass in…

Rising Covid cases can’t be blamed on variants alone as travel resumes, states lift restrictions, Fauci says

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious…

Universal could tap into AMC deal as it moves ‘Croods 2’ to Thanksgiving from Christmas

Still from Dreamworks’ “The Croods.” Dreamworks Universal Studios is pushing up the…

How Bryan Lourd became one of the most powerful people in the history of Hollywood

Bryan Lourd speaks onstage during the Lincoln Center American Songbook Gala honoring…