Exploring the difficulties of generating income in fixed income portfolios amidst declining yields and credit spreads. Discussion on the impact of inflation and rising interest rates on municipal bonds, along with strategies like tax swap trades and loss carryforwards to enhance income levels and shareholder value.
David Dowden, managing director at Mackay Shields, discusses with Seth Brumby, Deputy Managing Editor at Reorg, how to generate income for municipal portfolios following recent bouts of volatility in this week’s podcast.
Fixed income portfolios struggled for over a decade with a secular decline in interest rates, which reduced income for bondholders. This was followed by a meteoric rise in inflation and interest rates that hammered bond values. This was an opportunity to accrue tax swaps that can be applied toward future tax liabilities once the bond market rallied and produced better income generating investments.
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