Ron Schwartz of Seix Investment Advisors is “basically pounding the table and telling people to ‘buy munis at this time.’”
Schwartz, senior portfolio manager of the RidgeWorth SEIX Investment Grade Tax-Exempt Municipal Bond Fund, talked with ThinkAdvisor about why the municipal market is so attractive right now. (Schwartz also manages the RidgeWorth Seix High Grade Municipal Bond Fund and RidgeWorth Seix Short-Term Municipal Bond Fund.)
“We’re pretty bullish on the municipal market,” he told ThinkAdvisor. “We think that this is going to be an asset class that is going to outperform in the years to come.”
One reason Schwartz is so hot on munis is that it’s the “only tax-exempt investment out there.”
“Taxes are high,” he said. “We don’t think taxes are going to go lower anytime in the future.”
The other reason is that issuance of municipal bonds is up.
“We’ve seen record amounts of issuance in September and October,” Schwartz said.
In September, Blackrock reported a municipal issuance of $35.7 billion, which represented the largest September supply on record and followed record-setting August issuance. According to Blackrock, the September supply was up 51% versus 2015; it was also 35% above the five-year average and 28% higher than the 10-year average.
LPL research also showed how issuance surged in September.
Schwartz warns that this surge will likely slow down very soon.
“Issuance might continue into November, but by the end of November issuance is going to slow down and December it usually slows down even more and January is usually a slow month also,” he said.