BondBloxx’s Joanna Gallegos has recently introduced the IR+M Tax-Aware Short Duration ETF (TAXX), which aims to capitalize on opportunities in the municipal funds space. Gallegos believes that municipal bond portfolios should not be limited to fixed income securities and that investors should consider the relative value of after-tax income. She sees actively managed municipal bond exchange-traded funds as income-generating assets, especially in a high rate environment. She anticipates healthy returns even if the Federal Reserve begins to reduce interest rates this year.
TAXX, according to the BondBloxx website, holds almost 62% of its assets in municipal bonds. The fund’s five largest muni holdings by state as of Thursday were Illinois, Pennsylvania, New Jersey, New York, and Alabama. In addition to municipal bonds, the ETF also includes exposure to corporate and securitized bonds. BondBloxx claims that this mixed-bond strategy offers a broader opportunity to enhance after-tax total returns. FactSet describes TAXX as “tax efficient,” striking a balance between strong after-tax income opportunities and capital preservation through a combination of municipal and taxable short-duration fixed income securities.
Gallegos disclosed that TAXX’s current tax-equivalent yield is close to 6%, specifically 5.88% when calculated. With tax considerations being top of mind for investors, she believes now is the opportune time to think about taxes. Since its launch on March 14, TAXX has experienced a slight decline of 0.2% as of Friday. Despite this small setback, Gallegos remains optimistic about the fund’s performance, emphasizing its potential to deliver strong returns even in a changing interest rate environment.
Investors looking to invest in the municipal funds space may want to consider TAXX as an attractive option for generating income. With its diversified portfolio of municipal, corporate, and securitized bonds, as well as its focus on after-tax total returns, the ETF offers a unique opportunity to enhance income opportunities while preserving capital. Gallegos’ expertise in the municipal bond market and BondBloxx’s commitment to tax efficiency make TAXX a compelling investment for those seeking to maximize their returns in a tax-aware manner. Despite its recent launch, the fund’s potential for healthy returns and tax-efficient structure may appeal to investors looking to navigate the changing market conditions.
As the Federal Reserve considers changes to interest rates and bond yields fluctuate, TAXX’s focus on after-tax income and capital preservation could prove to be a valuable asset for investors seeking to optimize their portfolio returns. Gallegos’ emphasis on looking beyond traditional municipal bond portfolios and considering the relative value of after-tax income demonstrates BondBloxx’s innovative approach to managing fixed income securities. With a diverse range of holdings and a tax-efficient strategy, TAXX is well-positioned to weather market volatility and deliver strong returns for investors. Despite its brief track record, the ETF’s potential for income generation and tax efficiency make it a compelling option for those looking to invest in the municipal funds space.
In conclusion, the IR+M Tax-Aware Short Duration ETF (TAXX) offers investors a unique opportunity to access the municipal funds space through an actively managed and tax-efficient approach. With its diverse portfolio of municipal, corporate, and securitized bonds, as well as its focus on after-tax total returns, TAXX has the potential to deliver attractive income opportunities while protecting capital. Gallegos’ expertise in the municipal bond market and BondBloxx’s commitment to tax efficiency make TAXX a compelling choice for those seeking to maximize their returns in a tax-aware manner. Despite its recent launch, the fund’s innovative strategy and potential for healthy returns make it a promising investment in the changing market environment.
