In the world of investing, there is always a search for the next big opportunity to generate profits. One recent addition to the market is the IR+M Tax-Aware Short Duration ETF (TAXX), which aims to tap into the potential of municipal funds. Launched less than a month ago by Joanna Gallegos of BondBloxx, this ETF is designed to offer investors a unique way to maximize after-tax income.
Gallegos believes that municipal bond portfolios have untapped potential that goes beyond traditional perceptions. By focusing on the relative value of after-tax income, she sees actively managed municipal bond exchange-traded funds as a lucrative option in a high-interest rate environment. Even with the possibility of interest rate cuts by the Federal Reserve, she remains confident in the ability of TAXX to deliver healthy returns to investors.
Portfolio Composition
According to the BondBloxx website, nearly 62% of TAXX’s holdings consist of municipal bonds. The fund’s top five municipal bond holdings by state include Illinois, Pennsylvania, New Jersey, New York, and Alabama. Additionally, TAXX provides exposure to corporate and securitized bonds, offering a diversified approach to maximize after-tax total returns for investors. FactSet describes the fund as “tax efficient,” striking a balance between strong after-tax income opportunities and capital preservation through a mix of municipal and taxable short-duration fixed income securities.
Despite being relatively new to the market, TAXX has already shown promise. Gallegos highlights the portfolio’s tax-equivalent yield, noting that it currently sits close to 6%. This tax efficiency is a key selling point for the fund, especially in a time where investors are increasingly concerned about maximizing their after-tax returns. As of the most recent data, TAXX has experienced a slight decline of 0.2% since its launch on March 14th, suggesting that it is still finding its footing in the market.
The IR+M Tax-Aware Short Duration ETF (TAXX) represents a promising opportunity for investors looking to capitalize on the potential of municipal funds. With its unique approach to balancing after-tax income opportunities and capital preservation, TAXX offers a fresh perspective on the world of ETF investing. As the market continues to evolve, it will be interesting to see how TAXX performs and whether it can deliver on its promise of generating healthy returns for investors in the long run.
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