Puerto Rico. Higher interest rates. Health care and tax reform proposals. These are a few of the reasons behind some commentators’ predictions of muni market mayhem in 2017. So far, so wrong. Broad returns have been solid and, for the most part, the market has digested these developments with barely a hiccup. Revenue bonds account for more than two-thirds of the investable universe. Hospital bonds alone have more than 3,900 issues. With these types of munis, the credit fundamentals of the issuer are what really matters. Furthermore, volatility centered on specific issuers such as Puerto Rico, or broader factors like a Fed rate hike, can have a silver lining — creating attractive entry points for selective investors.

For more insights on how to position your fixed income portfolio, see our 2017 Midyear Outlook.