The Municipal/Taxable Crossover Trade’s Growing Importance

Tax rates are an important consideration in fixed income asset allocations. Tax exempt investors can benefit from “crossing-over” into tax-free municipals when municipal bond yields rise to abnormally high levels relative to taxable bonds.  Conversely, taxable investors can benefit from the crossover trade in reverse, i.e. buying taxable securities when municipal bond yields are unusually low relative to taxable bonds. Click for full White Paper.