February 12, 2020
The Bloomberg Barclays Municipal Bond Index, composed of more than 50,000 issues, is large, complex, and much less efficient to follow than a stock benchmark.
Over the long term, actively managed municipal bond funds have outperformed their passive benchmarks.
Municipal bond funds versus their benchmarks — 10 years (December 31, 2009 – December 31, 2019)
Data as of Dec. 31, 2019.
Past performance does not guarantee future results.
Sources: Bloomberg Index Services Limited and Morningstar fund data. Average fund return is based on the actively managed funds listed in each Morningstar category and is net of fees. 10-year returns are annualized.
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The active bars represent Morningstar Category returns. The passive bars represent category index returns. The passive index for each category is as follows: Municipal High Yield = Bloomberg Barclays 65% High Grade/35% High Yield Municipal Bond Index; Municipal National Intermediate = Bloomberg Barclays 1-15 Year Municipal Bond Index; and Municipal National Long = Bloomberg Barclays Municipal Bond Index.
What this means for investors:
While steady income may play an important role in an investor’s portfolio, the chart above illustrates the potential for increased growth through actively managed municipal bond funds.