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Ignore ratios, focus on longer-term municipal bonds


I know you are a proponent of buying long-term municipal bonds. In light of the current yield curve and muni-to-Treasury ratios, what credit rating, maturity, call date and coupon rate would you recommend?

L.C., California


James A. Klotz responds:

We do not believe in trying to time the interest-rate markets.

As you said, we are always proponents of buying longer-term bonds. They maximize income regardless of the ratio to Treasuries, which always proves to be ephemeral.

Like any investment, specific attributes of the municipal bonds you’re considering should align with your particular investment objectives.

May 17, 2018

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