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Virtus Viewpoints - Q4 Newfleet Tax-Exempt

Municipal Bonds – Strong Demand Continues

With the country still confronting the COVID-19 pandemic and the many negative implications on a human and financial level, the municipal bond market performed well during the fourth quarter as the risk-on environment continued. During the quarter, the market saw sustained demand for longer-dated and lower-rated investments as fiscal and monetary measures out of Washington, promising prospects of a vaccine, and strong technicals supported the market. While the performance of the municipal bond market was severely impacted at the onset of the pandemic (down over 7.60% through March), the Bloomberg Barclays Municipal Bond Index posted a positive 5.21% return for the year, with a fourth quarter return of 1.82%. With the election now decided, we believe that the municipal market will be focused on further fiscal stimulus to flow to states and local municipalities as well as on the potential for major tax and regulatory changes.

Newfleet Tax-Exempt Market Review

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The Bloomberg Barclays Municipal Bond Index is a market capitalization-weighted index that measures the long-term tax-exempt bond market. The index is calculated on a total return basis. The index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and is not available for direct investment.

The commentary is the opinion of the subadviser. This material has been prepared using sources of information generally believed to be reliable; however, its accuracy is not guaranteed. Opinions represented are subject to change and should not be considered investment advice or an offer of securities.

All investments carry a certain degree of risk, including possible loss of principal.

Past performance is not indicative of future results.

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