A historic tax-exempt income opportunity
The net result of the US Federal Reserve tightening cycle has been a significant increase in the yield available for investors who desire tax-exempt income. The market has reached yield levels not experienced in more than a decade.
When one looks at taxable-equivalent yields for municipal securities, investors have an opportunity to earn significant income, from a historical perspective. What makes this opportunity so compelling, in our view, is that, from a credit perspective, this is occurring at a time when municipal credit generally is as strong as it has been in decades.
Taxable-equivalent yields are more attractive than ever
Year-over-year taxable-equivalent yields for a AA-rated 30-year New York City Water municipal bond
Sources: Municipal Market Data, Bloomberg, October 2022.
*Taxable-equivalent yield, calculated using the top federal income tax bracket of 37% plus 3.8% Medicare tax.
Turning insights into action
Investment solutions to consider
Delaware National High-Yield Municipal Bond Fund (DVHIX)
Overall Morningstar ratingTM
A research-driven portfolio aimed to deliver a high level of income, with an emphasis on lower-grade, higher-yielding securities.
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Delaware Tax-Free USA Fund (DTFIX)
Overall Morningstar ratingTM
A diversified portfolio designed to deliver a high level of tax-exempt income by taking advantage of opportunities across the yield curve and quality spectrum.
Learn more
Delaware Tax-Free USA Intermediate Fund (DUSIX)
Overall Morningstar ratingTM
A shorter-term portfolio that emphasizes fundamental research in an effort to deliver competitive tax-free income with less interest rate sensitivity than longer duration strategies.
Learn more
Source: Morningstar. Data as of 9/30/2022 unless otherwise noted. Morningstar ranking is based on Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance. Past performance is no guarantee of future results.
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The views expressed represent the investment team’s assessment as of December 2022 and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice.
Investing involves risk including the possible loss of principal.
Past performance does not guarantee future results.
All charts are for illustrative purposes only. Charts have been prepared by Macquarie Asset Management unless otherwise noted.
© 2022 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
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