Risks Gathering in Municipal Bonds

The manager of Fidelity Intermediate Municipal Income says he has grown cautious following munis' strong returns and large inflows into muni funds.

Municipal bonds have enjoyed a fine run. Debt issued by state and local government entities, as measured by the Bank of America Merrill Lynch Municipal Master index, has returned 6.9% annualized over the past three years -- handsome performance by bond standards. Some of that return results from bond-price appreciation, but much of it has come in the form of interest that is exempt from federal income tax.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%
https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

To continue reading this article
please register for free

This is different from signing in to your print subscription


Why am I seeing this? Find out more here

Elizabeth Leary
Contributing Editor, Kiplinger's Personal Finance
Elizabeth Leary (née Ody) first joined Kiplinger in 2006 as a reporter, and has held various positions on staff and as a contributor in the years since. Her writing has also appeared in Barron's, BloombergBusinessweek, The Washington Post and other outlets.