Investment strategies

Separately managed accounts have exploded in the muni market in recent years but high-yield SMAs remain rare.

The slowdown of growth in the fourth quarter does not imply there is dwindling demand for munis, said Pat Luby, head of municipal strategy at CreditSights.

Investors like the 10-year area of the curve because "if they're buying duration, the tax-exempt market is usually going to be one of the best places to buy," said Wesly Pate, a senior portfolio manager at Income Research + Management.

Investors added $238.5 million to municipal bond mutual funds in the week ending Wednesday, following $1.124 billion of inflows the prior week, according to LSEG Lipper data.

"Our job is to take that volatility, figure out what's noise, figure out what's reality, and lean into the opportunities as we see them," said Alex Petrone, director of fixed income at Rockefeller Asset Management.

There are eight municipal bond interval funds, three of which launched last year, promising fewer liquidity constraints and the potential for higher returns.

Kim Olsan, senior fixed-income portfolio manager at NewSquare Capital, discusses the municipal market's performance, the impact of rising yields and inflation, and the evolving role of ETFs and separately managed accounts as the market braces for record supply in 2025.

The face amount of munis outstanding rose to $4.171 trillion, a 0.8% increase from Q2 2024 and 2.9% from Q3 2023, according to the latest Fed data.

Principal Street Partners will acquire the bankrupt firm that specialized in high-yield bonds issued for senior living facilities and charter schools.

With supply ballooning, reinvestment dollars at lows of the year, J.P. Morgan's Peter DeGroot argues the next few weeks could offer the best opportunity to buy bonds of the year – and possibly the rate cycle. DeGroot talks about this, plus potential impacts of shifting investor behavior on market liquidity, and what the upcoming election might mean for tax policy and the muni market. Lynne Funk hosts.