Have clients facing significant taxes this year? Looking at tax-loss harvesting options? It may be worth considering how a muni ETF can help. Munis combines exposure to tax-friendly assets and current income to help investors work through tax impacts. An active muni ETF, specifically, like TAXE, could offer a solution to investing tax impact worries.
See more: Active Blue Chip ETF TCHP’s Case for the Rest of 2024
While the election of former President Trump to a second term suggests taxes may be cut, many investors face tax impacts in the here and now. Many investors and advisors have to consider where to reinvest assets from tax-loss harvesting right now, likely from long-held fixed income allocations. TAXE’s active muni ETF approach can offer an appealing landing pad for those assets, as well as an option to add more tax resiliency in 2025.
(TAXE ), the T. Rowe Price Intermediate Municipal Income ETF, launched just this year. Charging a relatively low 24 basis point fee, the ETF seeks the highest level of income it can produce via municipal securities. Those securities, exempt from federal income taxes, have intermediate-term maturities, coming in across a range of credit qualities.
The active muni ETF’s managers assess interest rates, overall economic conditions, muni bond prices, yields, and credit quality levels. TAXE can consider some lower-quality muni bonds but mostly focuses on investment-grade debt securities. It looks to produce an effective range of maturities between four and 12 years. In doing so, the active muni ETF has provided a 3.31% 30-day SEC standardized yield, which is competitive in the tax free muni segment. Performance-wise, the fund has returned 2.66% since inception, slightly outdoing its benchmark.
The fund’s income provision may provide a helpful boost to offset tax impacts and help those nearing retirement. For those looking to ease the investing tax impact on portfolios, look to TAXE.
For more news, information, and analysis, visit our Active ETF Channel.
