BOSTON (AP) — Municipal bonds continue to provide a reliable refuge from stock market volatility and a steady source of tax-free income.
An index of muni bond mutual funds has recently been yielding around 2.18 percent. While that's nothing to brag about, it's a substantially higher yield than the roughly 2 percent that 10-year Treasury bonds offer, without factoring in the tax-exempt advantage that munis offer.
What's more, muni bond fund performance has recently been solid, as is typically the case with steady-as-it-goes munis. Funds investing in intermediate-term bonds issued from a variety of municipalities nationwide had returned about 0.7 percent through late May, according to Morningstar.
But for all of munis' stability, investors have clearly been scared the past several weeks. While other mutual fund categories have consistently attracted new cash, investors have been pulling money out of muni bond funds. During the five-week period ended May 15, withdrawals exceeded deposits, with a net $171 million flowing out, according to the Investment Company Institute.
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