Lewis Appelbaum, a retiree who invests in municipal bonds, said he’s not worried about the sub-1% yields. He estimates he has about 30% of his assets in municipals.
“It’s certainly unattractive, but where would you go?” he said. “Where would you put your money that’s going to be more attractive?”
Retail investors are notoriously bad at timing the market and often move like a herd, plowing in money when the market is going up and pulling back when it falls.
Debra Taylor, who advises high net-worth individuals at Taylor Financial Group in New Jersey, said she isn’t a “fan” of the municipal market given where yields are, but they still make sense for clients who don’t have the right temperament for risk.
Even a 30% or 40% allocation to municipals can make sense for some. “Part of it is a factor of what the alternatives are -- not that munis are this incredible, screaming opportunity,” she said.
This article was provided by Bloomberg News.