Prosperity Financial Group Logo

Season 2, Episode 3: Navigating The Bond Market

Meet The Expert S2 E3 Navigating The Bond Market Invesco

Share This Post

Welcome to Season 2, Episode 3 of Meet the Expert® with Elliot Kallen!

A well-managed bond portfolio can help retirees generate attractive returns while also managing volatility and mitigating risks. Elliot Kallen brings on Nick Henry, Portfolio Manager at Invesco to discuss the role of municipal bonds in your bond portfolio.

Listen to the podcast here

Meet Our Guest

Nick Henry Invesco

Nick Henry, MBA

Portfolio manager, invesco

Nick Henry is a client portfolio manager at Invesco. He specializes in fixed income education, municipal bonds, and the capital markets.

Municipal Bond Basics

Municipal bonds are unique, because:

  • Unlike Corporate Bonds and Treasury Bonds, the Muni market is traded over the counter.
  • The Muni market is a heavily retail-driven marketplace, whereas the Treasury, Corporate, sovereign fixed-income markets have heavy influence from institutional buyers.
  • The Muni bond marketplace is 75% driven by retail mom-and-pop investors. Because retail investors are driving the market for municipal bonds, the Muni market has less liquidity.

What’s the difference between buying a state-specific bond and a national bond fund?

Most investors are drawn to National Muni bonds because, in general, the interest income is Federal tax-free.

If you invest in a bond within your state, and your state has a state income tax (e.g., California, New York, or New Jersey), you’ll also be exempt from paying State income taxes.

Investors should invest in both state-specific and national bonds for the purpose of diversification (e.g., of bond yield).

What’s the difference between a municipal bond fund and a bond ladder?

The biggest difference is in diversification.

Bond ladders typically contain 15 to 20 individual bonds that mature on different dates. This strategy is designed to provide current income while minimizing exposure to interest rate fluctuations.

Larger municipal bond funds typically contain 1,000 to 2,000 different holdings.

This minimizes your exposure to fluctuations in bond yields and other factors that affect your fixed-income strategy.

Are there any risks involved in Muni bonds?

Muni bonds are a highly stable asset class. They are among the safest, most tax-efficient debt investments, with a historically low default rate.

From an investment standpoint, you’re over 90 percent likely to receive your principal and interest back.

What factors influence Muni bond prices?

Bond prices are influenced by several factors, including:

  • Civic unrest
  • Interest rates
  • Higher coupon rates
  • Interest rates
  • Prices on existing bonds

Did you enjoy this episode?

  • Be sure to subscribe to Meet the Expert® with Elliot Kallen so that you get our latest expert podcast episodes, announcements, and resources straight to your inbox!
  • Don’t miss an episode! Subscribe via Pandora, Spotify, Google Podcasts, Listen Notes, Stitcher, Tune In, and Deezer.
  • Leave us a review and share the show with your friends and family.

DISCLAIMER: Prosperity Financial Group and Meet the Expert® with Elliot Kallen do not make specific investment recommendations on Meet the Expert® with Elliot Kallen or in any public media. Any specific mentions of funds or investments are strictly for illustrative purposes only and should not be taken as investment advice or acted upon by individual investors. The opinions expressed in this episode are those of the Meet the Expert® with Elliot Kallen guests, and not necessarily of Elliot Kallen or Prosperity Financial Group.

Meet the Expert

Elliot Kallen Signature 5

Did you enjoy this episode?

We’d love to hear from you.

If you’d like to learn more about any of these topics and how it affects your finances– contact me today.

Prosperity Financial Group Logo

Allow us to help

As your Fiduciary Registered Investment Advisory firm, we’re bound by law to put your interests above our own. We’re committed to maximizing your wealth within the constraints of your values and your life goals.

Our team of qualified and experienced experts is dedicated to building a positive, long-term relationship with you.

Register for Prosperity Power Hour

Enjoy food and beverages, meet other successful professionals, improve your referral base, and win fun door prizes!

Because of the intimate nature of this event, we’re taking a very limited number of attendees per event. These seats will go fast, so grab one while you can!

Bringing a +1? Please have your guest fill out this form.