In One Chart: Municipal-bond inflows are smashing records in 2021


The municipal bond market is on a tear this year.

Concerns about rising taxes, a search for even a little bit more yield than what’s offered by Treasurys, and a bet that states and local entities would benefit from the Biden administration’s stimulus plans have boosted investor interest in the sector.

Data from Refinitiv Lipper (as shown in the chart above) shows that through mid-May, investors had plowed $41.7 billion into muni-bond funds. That’s nearly the same amount as in all of last year, putting 2021 on track to be one of the best years in history.

Weekly inflows have hit records multiple times this year, Lipper data show, even as such funds have underperformed. The iShares National Muni Bond ETF

and the First Trust Managed Municipal ETF

are both essentially flat in the year to date.

Investor interest in munis is a boon for state and local governments, many of which face a daunting backlog of big-ticket needs, from construction projects to systems modernization.

Read next: Washington wants to bring back Build America Bonds. The muni market isn’t buying it

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