High Yield Municipals versus Other Asset Classes
Before we dive into some of the basic principles of a successful tax-exempt high yield strategy, let us review how high yield municipals have performed as an asset class over the past decade or so.
Ignoring the risk side of the equation for now, the lower-grade sector of the municipal market has clearly fulfilled its yield mandate over the last few years. Figure 3.1 compares the monthly yield for Standard & Poor’s High Yield Municipal Index to its Investment Grade Index from January 1999 through July 2011.
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