Municipal Bonds' Enduring Role Amid Alternative Investments
Municipal bonds continue delivering reliable tax-exempt income and portfolio stability despite the rise of private equity, hedge funds, and direct real estate. High-net-worth investors value munis for their federal tax exemption—often state tax-free too—which boosts after-tax yields significantly for top brackets. These bonds fund essential public infrastructure while offering lower default rates than corporates, making them a ballast against equity volatility. Tax Efficiency Outshines Headline Yields A 3.5% muni yield equals 5.8% taxable for 40% bracket investors, surpassing many alternatives after taxes. Unlike private credit yielding 8-10% but fully taxable, munis create genuine net income superiority. High-yield munis extend this edge for risk-tolerant allocations, though investment-grade general obligation bonds anchor core holdings with AAA/AA ratings. Family offices layer munis strategically: core intermediate SMAs (2-8 year duration) for steady cash flow, high-yield...