Latest news with #McFee
CNBC
01-07-2025
- Business
- CNBC
Scoop up tax-free yield and keep price fluctuations in check with these bonds
An opportunity is taking shape within the world of tax-free bonds – and it may offer investors some outperformance if they're careful. Municipal bonds are beloved by high income investors as they spin off interest income that's free of federal taxes. They're also tax-exempt on a state basis if the investor resides in the issuing state – a feature that can provide meaningful savings in high-tax locales like New York and California, where top income tax rates are 10.9% and 13.3%, respectively. Retail investors have also been jumping into the space as of late, with Vanguard's Tax-Exempt Bond ETF (VTEB) scooping up $1.9 billion in inflows over the past month. Year to date, the fund has seen more than $2.7 billion in flows. VTEB has a 30-day Securities and Exchange Commission yield of 3.87% and an expense ratio of 0.03%. Even as tax-advantage yield may be attractive, investors may be missing out if they stick solely with muni bonds that are short in duration – meaning that they have less price sensitivity to changes in interest rates. Fixed income assets with short duration also tend to have shorter maturities. The upshot is that they offer solid yield when interest rates are high. However, they don't see as much price appreciation once the Federal Reserve dials back rates. Bond yields and their prices are inversely related, and longer-duration issues tend to have the greatest price sensitivity when rates fluctuate. "The crowd mentality that's driven by fear is heading to the front end of the yield curve," said Stephen McFee, senior portfolio manager at Vanguard. "They are running from that duration risk. The overlooked part of the market is the long-end part of the market." "Don't shun the long end. That's where we see value now," he said. McFee is also portfolio manager on Vanguard's Core Tax-Exempt Bond ETF (VCRM) , which has an average stated maturity of 14.4 years, but an average duration of 7.3 years. The fund has a 30-day SEC yield of 4.07%, and an expense ratio of 0.12%. A sensible approach to managing duration Adding duration to municipal bonds has also been the rallying cry at Bank of America, where strategists have been calling for a reacceleration in the muni market rally both near term and in the rest of the year. One of the reasons behind that is because headlines around tariffs aren't as shocking as they were in April – and that means that even when the 90-day reprieve on the steepest of President Donald Trump's tariffs ends next week, bonds may not see yields spike the way they did earlier this year, according to Yingchen Li, municipal research strategist at Bank of America, in a June 6 report. In a June 27 report, the Bank of America muni team said it's overweight single-A and triple-B municipal bonds, and it's sticking with its suggestion that investors add duration exposure. That doesn't necessarily mean to load up indiscriminately on the longest-dated municipal bonds, however. Active managers seem to largely be focusing on the intermediate part of the muni bond curve – that is, the 3- to 7-year part of the range – and being careful with duration, said Shannon Saccocia, chief investment officer - wealth for Neuberger Berman. This intermediate duration offers yield and the opportunity for price appreciation – but the swings aren't as dramatic as what would likely show up on the issues with longest durations. "While there's some hesitation on duration, taking a little bit of it – especially that 3- to 7-year range – and given the attractive pricing right now, it's not something to be overly concerned about," she said. "If you're looking under the hood, and you're in a double-digit duration, maybe you'll want to ask some questions, but active managers are managing that duration risk pretty well," Saccocia added. Customizing duration Investors who snap up individual muni issues for a customized portfolio can work with an advisor to determine the average duration they should have – and they can sit tight through fluctuations in prices because they are waiting for maturity. Those who use mutual funds and exchange traded funds to address their muni bond needs, however, have the benefit of liquidity — and they can get exposure to the space with fewer assets. Still, they'll see plenty of price fluctuations in the meantime. In that case, investors may want to consider working with an advisor to pair a short-duration muni bond fund with a long-duration counterpart, said Blair duQuesnay, certified financial planner at Ritholtz Wealth Management in New Orleans. "You would start with what average duration you want to have, and you blend the two," she said. "The advisor needs to be aware of what strategy is used in each fund. But if you start with 'What duration am I comfortable with?' The ratio of the two funds is based on what you want this average duration to be."
Calgary Herald
02-06-2025
- Politics
- Calgary Herald
'What kind of chief': Police commission searching for Edmonton's top cop
Article content 'It's a very senior leadership position, not an easy one, running a very complex organization with very complex responsibilities, and it's going to take somebody who truly understands that, but has the right temperament to connect, connect out and collaborate with the rest of the city,' he said. Article content Post-COVID, post McFee Article content Edmonton's been through some tough years, and it's felt at the policing level, Henderson said. Article content When former chief Dale McFee was hired after the exit of Chief Rod Knecht, Henderson was a city councillor, the COVID pandemic and the 'defund' movement were unknowns. Article content 'No one ever thought we were going to go through something like that. You know, the turmoil that was fired up about American police forces with George Floyd's death hadn't happened. It was a very different space for policing. I think both of those things upset the status quo in policing in ways I think we're still just beginning to understand,' Henderson said. Article content Article content 'It was a very different world back then and the challenges that he had to face in the service were very hard to anticipate.' Article content Article content The incoming chief will have their hands full, naturally. Like cities everywhere, Edmonton's a different place now, with different expectations in a world still raw with COVID recovery and what poverty and addiction issues. Article content 'All those kind of things have got a lot of people out there hurting. That's creating worry for everybody,' Henderson said. Article content 'It's a different world and and where we go next in terms of making people feel confident again and safety in the city is, I think, an ongoing challenge.' Article content All that will take different solutions — and the right person at the right time. Article content 'Back when Dale was hired, I think there was a feeling that things needed to shift and change a bit at that point, is my memory, so they were looking for someone who is going to come in and bring some real creativity and be a change agent. I'm not sure. I think what we heard from people this time was that although they certainly want to see progress continue, they want to see continued movement forward, that this is not as a time for radical (change) in what we were doing and where we're going with the chief,' Henderson said. Article content Article content 'It's about continued, steady improvement.' Article content Those surveyed had real concern for the well-being of the service and its members, Henderson said. Article content 'We also heard an awful lot from people externally that they wanted to make sure that we were taking care of the folks we had,' Henderson said. Article content While concerns remain about transit safety, the city's crime stats are showing trending in the right direction in terms of it being a safer city, he said. Article content Article content The experiment has been successful, Henderson said. Article content 'I think the two of them are working really well together…That's part of what they committed to going into it, and I think they have a lot of respect for each other. It's been really interesting, because they both bring different strengths,' he said. Article content 'We've heard nothing but positives about how that's going.' Article content Timing Article content The job posting is now up, and the commission hopes to have a recommendation for the city's new top cop within four months, ideally the last council meeting prior to the October election, but the search could go into November. Article content 'We want to get it right,' said Henerson. Article content 'It was a really good listening exercise for us. Hopefully people will see what they all had to say reflected in the chief that we're now going to ask for,' he said. Article content
