Expert insight
Muni bond investing that embraces Bogle’s standard
April 10, 2025
Assets in passively managed municipal ETFs have nearly tripled over the last five years, reaching $118 billion1 and setting a new standard inspired by John Bogle’s legacy. Once considered impractical due to the fragmented nature of the asset class, municipal bonds have now become a viable strategy as part of an investor’s portfolio, Vanguard Head of Municipals Paul Malloy says.
In a recent Kiplinger’s article, Malloy discusses several points about muni investing including:
- The “Bogle standard”: Investors should expect index-level returns or better from their municipal bond investments. There are now numerous passive municipal strategies, covering various investment-grade exposures.
- Recent advancements: Technology, data, systematic trading, and risk analytics play a crucial role in successful municipal indexing, a strategy that was slower to grow.
- Alpha: Some investment managers may present strategies that deliver excess beta as alpha. Investors should scrutinize these strategies, considering benchmark-relative performance and ensuring they align with their investment goals.
1 Source: Morningstar, as of 12/31/2024.
Notes:
All investing is subject to risk, including the possible loss of the money you invest.
Although the income from a municipal bond is exempt from federal tax, you may owe taxes on any capital gains realized through the fund’s trading or through your own redemption of shares. For some investors, a portion of the fund’s income may be subject to state and local taxes, as well as to the federal Alternative Minimum Tax.
