When home is where you want your money to be

In this installment of “Feeling Taxed?," Peter Hayes looks at how “made-in-the-USA" municipal bonds might offer some insulation from international risk.

There are plenty of issues taxing investors today, and many of them reside beyond U.S. borders. One of the biggest worries since Day 1 of 2016: China. A slowdown in growth there has been blamed in part for the slide in oil given that China is the biggest consumer of the commodity. And so we ask:

Are you worried about how slowing growth in China and general geopolitical unrest beyond U.S. borders might impact your portfolio?

An investment in municipal bonds means investing at home. Munis are issued by U.S. states and their political subdivisions only. They have zero to minimal correlation with Chinese equities, other emerging markets or any non-U.S. stock market.

chart-income-stocks

For more of the potential advantages of municipal bonds, check out more from our Feeling Taxed? series, including When volatility taxes your patience and your portfolio and Where to find decent income without indecent risk.

 

Peter Hayes, Managing Director, is head of BlackRock’s Municipal Bonds Group and a regular contributor to The Blog.

Investment involves risks, including possible loss of principal. The two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments. There may be less information available on the financial condition of issuers of municipal securities than for public corporations. The market for municipal bonds may be less liquid than for taxable bonds. A portion of the income may be taxable. Some investors may be subject to Alternative Minimum Tax (AMT). Capital gains distributions, if any, are taxable.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of April 4, 2016, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. There is no guarantee that any forecasts made will come to pass. Any investments named within this material may not necessarily be held in any accounts managed by BlackRock. Reliance upon information in this material is at the sole discretion of the reader.

 

USR-8857

Join the Conversation

What are your questions about munis and taxes? What are your questions about munis and taxes? Join in >