For Higher Tax-Equivalent Yields, Consider A Diversified Muni Bond ETF

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    Published Fri, 10 Aug 2012 15:30:30 -0400 on Seeking Alpha


    Historically, municipal bonds have been one of the quieter corners of the investment world. Sure, there was the occasional single-municipality meltdown, such as what happened to Orange County, Calif., in 1994. Still, what made these events so newsworthy was the actual rarity of these kinds of disasters. That has all changed as municipalities have been blind-sided by falling tax receipts in the wake of the housing crash. Defaults are still rare because of the stigma associated with defaulting. As more municipalities have trouble meeting their obligations, they will have to make a choice between making interest payments or paying for basic services like firefighters. One way to reduce the risk of municipal defaults is to own a diversified national municipal bond fund like iShares S&P National Municipal Bond ETF (MUB). While an increase in defaults is likely, the diversification inherent in the... Read more