From The Motley Fool · Jake Lerch · · 1m
Choosing Fixed-Income Paths: Municipal vs. Broad Market Bonds
Investors pick between municipal bonds and taxable bonds for tax efficiency and income.
In brief
Investors pick between municipal bonds and taxable bonds for tax efficiency and income. Tax-exempt municipal bonds (MUB) lower tax burden but offer lower yields than broad market bonds (BND). Originally reported by The Motley Fool.
Quick answers
- Which Fund Fits Your Needs?
- Tax-exempt investors prefer MUB; income seekers choose BND for higher yields and diversification.
- What is the key takeaway from Choosing Fixed-Income Paths: Municipal vs. Broad Market Bonds?
- Tax-exempt municipal bonds (MUB) lower tax burden but offer lower yields than broad market bonds (BND).
Tax Status and Income Preference
Investors choose between municipal bonds and taxable bonds based on tax status and income needs.
MUB vs. BND Fund Profiles
MUB tracks municipal bonds; BND covers broad taxable investment-grade bonds.
Key Metrics Snapshot
MUB: $102.48 share price, 0.05% expense ratio, 3.3% dividend yield. BND: $70.81 share price, 0.03% expense ratio, 4.2% dividend yield.
Performance and Risk Comparison
MUB has a 11.6% max drawdown over five years; BND has a 17.4% max drawdown over five years.
Investment Strategy Differences
BND targets broad U.S. taxable bonds; MUB focuses on municipal bonds for tax advantages.
Which Fund Fits Your Needs?
Tax-exempt investors prefer MUB; income seekers choose BND for higher yields and diversification.
The main idea
Tax-exempt municipal bonds (MUB) lower tax burden but offer lower yields than broad market bonds (BND).
