A Complimentary Webinar for Financial Advisors Include ...€¦ · Include Municipal Bonds in Your...

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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High Yield Municipals Are More Attractive on an After-Tax Basis

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Municipals Have Exhibited Lower Volatility

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Municipal Bonds Have Historically Defaulted at Rates Lower Than Equivalently Rated Corporates

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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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