Rieger report june 22 2018 munis corporates

AAA Municipal Bond v. U.S. Treasury & Corporate Bonds
June 22, 2018
JR Rieger
jrrieger@yahoo.com | (516) 524-1110 | theriegerreport.com

June 22, 2018
1 (516) 524-1110 jrrieger@yahoo.com | www.theriegerreport.com
6/22/2018
Municipal Bond Market: Key Takeaways
• AAA & AA Tax Exempt Nominal Yields:
• Munis appear rich across the curve relative to high quality corporate bonds such as Apple Inc.
• Munis appear attractive relative to the S&P 500 Dividend Yield (current indicated yield) from 3 year maturity range and
longer.
• Munis are rich relative to U.S. Treasury bond yields in the 0 – 10 year range and become attractive again at the 20 year
maturity range and longer.
• Taxable Equivalent Yields:
• In the 0 – 5 year range Taxable Equivalent Yields (TEY) for most tax brackets show AAA municipal bonds also still are rich
relative U.S. Treasury bond yields.
• Out longer, i.e. the 10 year and longer range, Taxable Equivalent Yields for most tax brackets show munis are of value relative
to U.S. Treasury bonds.
• When comparing munis to high quality corporate bonds, such as Apple Inc., AAA muni Taxable Equivalent Yields for the
higher tax brackets are competitive. At lower tax brackets, Apple Inc. bond yields remain relatively favorable in comparison
to AAA municipal bond Taxable Equivalent Yields.
• Bond ETFs:
• The larger municipal bond ETFs indicate a value from a Taxable Equivalent Yield perspective relative to the taxable yield of
large corporate bond ETFs given the shorter duration and higher quality of the municipal bond ETFs in general.

June 22, 2018
6/22/2018
AAA Municipal Bond Yields as % other Asset Class Yields
40%
60%
80%
100%
120%
140%
160%
180%
3 Year 5 Year 7 Year 10 Year 30 Year
% of U.S. Treasury % of S&P 500 Dividend Yield % of Apple Inc Bond Yields
Data as of 6/22/2018. Sources: Apple Inc. bond yields provided by SQX https://sqx.com/ . Municipal bond yields sourced from the
Bond Buyer www.bondbuyer.com Data Workstation and MBIS www.mbis.com, U.S. Treasury yields sourced from the U.S.
Department of the Treasury www.treasury.gov and the S&P 500 Dividend Yield was sourced from S&P Dow Jones Indices
www.spdji.com . Chart is provided for illustrative purposes only.
Nominal long end
AAA muni yields at
parity to US
Treasury and well
above S&P 500
Dividend Yield but
only 76% of Apple
Inc. corporate bond
yields.

June 22, 2018
6/22/2018
AA Municipal Bond Yields as % of other Asset Class Yields
40%
60%
80%
100%
120%
140%
160%
180%
3 Year 5 Year 7 Year 10 Year 30 Year
% of U.S. Treasury % of S&P 500 Dividend Yield % of Apple Inc Bond Yields
Data as of 6/22/2018. Sources: Apple Inc. bond yields provided by SQX https://sqx.com/ . Municipal bond yields sourced from the
Bond Buyer www.bondbuyer.com Data Workstation and MBIS www.mbis.com, U.S. Treasury yields sourced from the U.S.
Department of the Treasury www.treasury.gov and the S&P 500 Dividend Yield was sourced from S&P Dow Jones Indices
www.spdji.com . Chart is provided for illustrative purposes only.

June 22, 2018
Data as of 6/22/2018. Sources: Municipal bond yields sourced from The Bond Buyer www.bondbuyer.com Data Workstation and
MBIS www.mbis.com , U.S. Treasury bond yields sourced from the U.S. Department of the Treasury www.treasury.gov and the
S&P 500 Dividend Yield was sourced from S&P Dow Jones Indices www.spdji.com . Chart is provided for illustrative purposes
only.
1.92
75%
81%
91%
100%
101%
70%
75%
80%
85%
90%
95%
100%
105%
1.25
1.75
2.25
2.75
3.25
0 5 10 15 20 25 30 35
%ofUSTYield
Yield%
Year
6/22/2018
AAA Municipal Bond Yields
AAA Muni Yield US Treasury Yield S&P 500 Dividend Yield % of UST Yield
S&P 500 Dividend Yield

June 22, 2018
1.5
2
2.5
3
3.5
4
4.5
5
5.5
0 5 10 15 20 25 30
Yield%
Year
6/22/2018
AAA Municipal Bond Yields & Taxable Equivalent
Yields v.
U.S. Treasury Bond Yields
AAA Muni UST TEY 37% TEY 32% TEY 24% TEY 12% TEY 10%
Data as of 6/22/2018. Sources: Municipal bond yields sourced from the Bond Buyer Data Workstation www.bondbuyer.com and MBIS
Municipal Yield Curves, U.S. Treasury bond yields sourced from the U.S. Department of the Treasury www.treasury.gov. Chart is provided for
illustrative purposes only. TEY = Taxable Equivalent Yield at tax rate assumption stated.

June 22, 2018
1.5
2
2.5
3
3.5
4
4.5
5
5.5
0 5 10 15 20 25 30
Yield%
Year
6/22/2018
AAA Municipal Bond Yields & Taxable Equivalent
Yields v.
Apple Inc. Corporate Bond Yields
AAA Muni Apple Inc. TEY 37% TEY 32% TEY 24% TEY 10%
Data as of 6/22/2018. Sources: Apple Inc. bond yields provided by SQX https://sqx.com/ . Municipal bond yields sourced from the Bond Buyer
Data Workstation www.bondbuyer.com and MBIS www.mbis.com. Chart is provided for illustrative purposes only. TEY = Taxable Equivalent
Yield at tax rate assumption stated.

June 22, 2018
1.5
2
2.5
3
3.5
4
4.5
5
5.5
0 5 10 15 20 25 30
Yield%
Year
6/22/2018
AA Municipal Bond Yields & Taxable Equivalent
Yields v.
Apple Inc. Corporate Bond Yields
AA Muni Apple Inc. TEY 37% TEY 32% TEY 24% TEY 10%
Data as of 6/22/2018. Sources: Apple Inc. bond yields provided by SQX https://sqx.com/ . Municipal bond yields sourced from the Bond Buyer
Data Workstation www.bondbuyer.com and MBIS www.mbis.com. U.S. Treasury bond yields sourced from U.S. Department of the Treasury
www.treasury.gov. Chart is provided for illustrative purposes only. TEY = Taxable Equivalent Yield at tax rate assumption stated.

June 22, 2018
6/22/2018
Bond Exchange Traded Funds (a sampling)
• The Larger Investment Grade Municipal Bond ETFs:
• Tend to have shorter durations than larger investment grade corporate bond ETFs. This is a natural reflection of the
investment grade municipal bond market – which is currently tracking approximately 2.5 years shorter in duration to
corporate bonds.
• Have comparable Taxable Equivalent Yields (TEYs) relative to investment grade corporate bond ETFs. (When using the highest
tax bracket (37%) in the calculation)
Note: Not all municipal and corporate bond ETFs selected for the example table on page 10.

June 22, 2018
Data as of 6/22/2018. Sources: VanEck www.vaneck.com, iShares by BlackRock www.ishares.com, and The Vanguard Group
www.vanguard.com. Table is provided for illustrative purposes only. Past performance is not a guarantee of future returns. TEY =
Taxable Equivalent Yield calculated at an assumed 37% tax rate.
6/22/2018
I.G. Municipal Bond ETFs v. I. G. Corporate Bond ETFs
Intermediate National
Municipal Bond
National Municipal
Bond
National Municipal Bond Intermediate
Corporate Bond
I.G. Corporate Bond
VanEck Vectors AMT-Free
Intermediate Municipal
(ITM)
iShares National
Municipal
(MUB)
Vanguard National
Municipal
(VTEB)
Vanguard
Intermediate-Term
Corporate
(VCIT)
iShares iBoxx
Investment Grade
Corporate
(LQD)
Yield 2.47%
(TEY at 37% = 3.92%)
2.4%
(TEY at 37% = 3.81%)
2.49%
(TEY at 37% = 3.95%)
4.07% 4.12%
Duration 6.9 5.95 5.6 7.5 8.4
Assets Under
Management
$1.6billion $9.67billion $3.2billion $18.4billion $32.1billion
Management
Fee
24bps 7bps (25bps prior to
18bps in fee wavers until
May 2023)
9bps 7bps 15bps

June 22, 2018
• Municipal bond yields: the Bond Buyer Data Workstation
https://dataworkstation.bondbuyer.com/
• Municipal bond yields: MBIS https://mbis.com/
• Apple Inc. bond yields: SQX https://sqx.com/
• U.S. Treasury bond yields: U.S. Department of Treasury
https://www.treasury.gov
Sources Used in this Report

June 22, 2018
Notes:
• Taxable Equivalent Yield = Tax Exempt Yield / (1 – Federal Tax Rate)
• 2018 tax brackets, however not all tax brackets are represented
herein
• End of day yields are used

June 22, 2018
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Rieger report june 22 2018 munis corporates

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