a complimentary webinar for financial advisors include ...€¦ · include municipal bonds in your...
TRANSCRIPT
Thomas E. Cartee, Jr. Senior Investment Advisor Sheets Smith Wealth Management
THURSDAY, SEPTEMBER 1, 2016 2:00 P.M. (EDT) 11:00 A.M. (PDT)
Include Municipal Bonds in Your Strong Core
S&P Dow Jones Indices A Complimentary Webinar for Financial Advisors
FD iS-14594 FOR INSTITUTIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION
State Revenue Growth Continues to Grow
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Total Issuance is High, but New Supply is Limited
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FD iS-14594 FOR INSTITUTIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION
High Yield Municipals Are More Attractive on an After-Tax Basis
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Municipals Have Exhibited Lower Volatility
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FD iS-14594 FOR INSTITUTIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION
Municipal Bonds Have Historically Defaulted at Rates Lower Than Equivalently Rated Corporates
Tom Cartee •336-765-2020 •[email protected] FOR FINANCIAL PROFESSIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION
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Taxable-Equivalent Yield Varies by State
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Trading volume over a bond’s lifecycle
8
Source: MSRB as of 12/31/2015
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Challenges with bond trading efficiency
California Bay Area Toll Authority Revenue Bond 5% 10/1/2054. All customer trades between 7/1/2016 and 8/3/2016 under $10 mm Source: MSRB
Customer Purchases Customer Sales
Transaction Size
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Muni ETFs can offer cost savings relative to trading individual bonds
Source: NYSE Arca, BlackRock as of December 2015. S&P Dow Jones Indices, January 2016.
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Increasing Portfolio Efficiency
Trading individual municipal bonds is more challenging now than in the past.
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Holding bonds directly creates challenges with Liquidity Getting bids and offers in volatile markets
Trading when you need to trade
Access Exposure to many of issuers, rather than the ones trading today
Performing sufficient research on individual credits
Scale Getting sufficient diversification, especially for smaller accounts
High transaction costs on odd lots
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Portfolio Example Incorporating Individual Muni Bonds and Muni Bond ETFs
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