TAX-EXEMPT MUNICIPAL BOND STRATEGY
TAX-EXEMPT MUNICIPAL BOND STRATEGY
The Tax-Exempt Municipal Bond Strategy aims to provide income exempt from federal and, in some cases, state and local taxes by investing in municipal bonds. These are debt securities issued by states, cities, counties, and other governmental entities to finance public projects. This strategy is typically favored by investors in higher tax brackets seeking to reduce taxable income and preserve capital.
Key Elements of the Strategy:
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Tax-Exempt Income: The primary attraction of municipal bonds is their tax-exempt status. The interest income generated by these bonds is typically exempt from federal income taxes. When the bonds are issued within the investor's resident state, they may also be exempt from state and local taxes.
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Credit Research: A crucial part of a tax-exempt municipal bond strategy involves assessing the creditworthiness of the issuing municipality. We analyze the issuer's financial health, the economic stability of the region, and the project's potential for success. Credit rating agencies provide ratings that can assist in this analysis.
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Duration Management: Duration, or sensitivity to interest rate changes, is critical in bond investing. We consider the bond's duration in terms of our expectations for interest rate movements. If rates are expected to rise, a shorter duration strategy may be more appropriate.
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Diversification: A diversified portfolio of municipal bonds from different issuers and sectors can help manage risk. The municipal market is broad and includes various types of bonds, such as general obligation bonds, revenue bonds, and pre-refunded bonds, each offering different levels of risk and return.
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Yield Curve Positioning: The yield curve, which plots the yields of bonds of the same quality but different maturity dates, can impact bond returns. By strategically positioning the portfolio based on expectations of yield curve movements, we strive to enhance returns and mitigate risks.
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Active Management: An actively managed municipal bond portfolio can adapt to changing market conditions, adjusting factors like duration, credit exposure, and yield curve positioning to take advantage of opportunities and manage risks.
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Regular Monitoring and Rebalancing: We regularly review your portfolio to ensure it aligns with your investment objectives and risk tolerance. Changes in interest rates, credit ratings, and tax laws can impact the attractiveness of municipal bonds and may require portfolio adjustments.
Summary: A tax-exempt municipal bond strategy aims to provide a steady stream of tax-exempt income while preserving capital. Despite being generally safer than corporate bonds, municipal bonds are not without risk, and we carefully consider factors like credit risk, interest rate risk, and liquidity risk.
Strategies Overview
At Infinitus Wealth Management, we deliver personalized wealth management strategies that align with your specific financial objectives and individual risk tolerance. Our approach is grounded in a thorough understanding of global financial markets and consistent research, allowing us to construct diverse, resilient, and custom portfolios intended to withstand market volatility while pursuing attractive returns.
We build custom portfolios and offer multiple investment strategies to meet our clients' unique investment goals. We actively manage several US equity, international equity, fixed income, tax-exempt fixed income, and blended strategies ranging from large-cap to small-cap equity and income-generating strategies.
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Asset Allocation: Our investment strategy starts with asset allocation, which we consider the most vital determinant of portfolio returns and risk management. We create a balanced mix of various asset classes, such as equities, fixed income, cash, real estate, and alternatives. The blend is customized to your risk appetite, financial objectives, and investment time horizon.
Diversification: We adhere to the principle of diversification among asset classes and within each asset class. By spreading investments across various sectors, geographic locations, and market capitalizations, we aim to mitigate risk potential.
Risk Management: Risk assessment forms a crucial part of our investment strategy. We continuously monitor and adjust portfolios to manage exposure to market risks. By utilizing advanced risk management techniques and tools, we ensure your portfolio aligns with your personal risk tolerance and long-term objectives.
Tactical Asset Allocation: We go beyond a static allocation approach by employing tactical asset allocation strategies. Our investment team actively adjusts the asset mix in response to short-term market predictions to exploit market inefficiencies or seize new opportunities while maintaining a balance with the strategic asset allocation targets.
Tax-Efficient Investing: Our strategies consider the impact of taxes on your investment returns. We aim to maximize after-tax returns through strategies like tax-loss harvesting, holding investments longer for favorable long-term capital gain rates, and strategically placing investments in tax-advantaged accounts.
Regular Portfolio Review and Rebalancing: Investment is not a one-time action but a dynamic process that requires ongoing oversight. We conduct regular reviews of your portfolio to ensure it remains in line with your goals and risk tolerance. Rebalancing, when necessary, helps maintain the desired level of risk and return.
At Infinitus Wealth Management, we understand that every client's investment journey is unique. As such, we don't offer a one-size-fits-all strategy but instead customize each portfolio to suit your individual needs and preferences. Our team is committed to working closely with you, providing the guidance and resources necessary to navigate the complex world of investing and to help your wealth grow and persevere over time.