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Municipal Bonds

INVESTMENT INSIGHTS  |  January 2015

Not Your Father’s Municipal Bond Market

Bloomberg Barclays Municipal Index Market Structure

The rating profile of the municipal bond market has changed dramatically in the last few years.

Source: Bloomberg Barclays

 

This is not your father’s municipal bond market. Since the financial market disruptions of 2007, the municipal bond market has transformed from a rates-driven market to a credit market that trades much more closely with the corporate bond market than Treasuries.

Credit risk has become a primary driver of valuations, and an in-depth understanding of the finances and other credit variables of issuing entities has become a prerequisite to successful investing in the market.

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Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses or the collective investment trust's Characteristics statement, which can be obtained from a financial professional, Capital or your relationship manager, and should be read carefully before investing. 

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and not to be comprehensive or to provide advice.