Municipal Bond ETF Model Portfolio Rebalance for Q3 2019
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Sources: VanEck Vector Funds,iShares by BlackRock, and The Vanguard Group. Table is provided for illustrative purposes only. Past performance is not a guarantee of future results. TEY = Taxable Equivalent Yield calculated at an assumed 37% tax rate. Data as of 6/17/2019 unless noted: 16/14/2019, 25/31/2019.
Rebalancing objective: Generate incremental yield over market “beta” while maintaining duration risk exposure.
Eliminating exposure to overpriced short term investment grade municipal bond market by reducing exposure in SUB from 5% in Q2 2019 to 0% as we enter Q3 2019.
Reducing exposure to investment grade munis in general by dropping allocation in VTEB down to 40% from 45% in Q2 2019.
Increasing exposure in SHYD for short term high yield municipal bonds from 30% in Q2 2019 to 35% for Q3 2019 taking advantage of incremental yields.
Increasing exposure in HYD for high yield municipal bonds from 20% in Q2 2019 to 25% for Q3 2019 extendingboth duration and credit risk in return for incrementally higher yields.
Staying as liquid as possible by using larger ETFs and that have options available on the ETF where possible and staying efficient by keeping management fees as low as possible.
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Rebalance for Q1 2019
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