MFS IM launches strategy for taxable municipal bonds

MFS Investment Management has launched a strategy for taxable US Municipalities. The new strategy seeks not only to increase value but also to provide a total return focusing on current income. To do this, it mainly invests in US dollar-denominated municipal bonds issued by American local authorities. In addition, opportunities in the market for tax-exempt municipal bonds can be used.

The objective is to increase the return compared to the benchmark (75% Bloomberg Barclays Taxable Municipal index, 25% Bloomberg Barclays Municipal Bond index) in view of a market cycle with volatility in terms of index volatility. For this purpose, macroeconomic assessments are combined with individual value-specific fundamental analyses. Not least because of this, the investment team should find the most attractive securities at a reasonable active risk.

With a volume of $3.8trn, the American Municipal market is extensive, diverse and offers many opportunities. Although only about 10% of the market is taxable, this segment also offers many opportunities. The asset class consists primarily of quality bonds, which offer investors the prospect of higher yields and total returns and diversify into other asset classes.

MFS has four decades of experience in Municipal Management through an approach to fundamental credit, sector and asset value analysis. The strategy is managed jointly by Geoff Schechter and Jason Kosty.

Institutional investors can invest in the strategy via an institutional mutual fund (in the form of a Luxembourg FCP fund Commun de Placement) and through a special fund mandate.

Ridhima Sharma
Ridhima Sharma speaks German and is DACH Correspondent for InvestmentEurope. She has more than 8 years of experience in the media industry. Before joining us, she was working in India and covering automotive and lifestyle sectors. Over the years many of her stories have been published in various magazines across India.

Read more from Ridhima Sharma

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