Municipal bond investing

Simulating the effects of rising rates on municipal bond returns

Cadmus Hicks, CFA, PhD
Manager of Performance Risk Analysis, Market Strategist,  Nuveen Asset Management

While interest rates have already increased considerably since the end of August, investors remain concerned about potential additional increases as the monetary policies of the Federal Reserve become less accommodative. The immediate effect of a rise in interest rates is, of course, a drop in the value of fixed income investments. However, for investors with a longer time horizon, higher interest rates may mean better total returns.

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