Savvy investors can think outside the box to lock in returns that many in the market may be missing.
One way to stand out would be to utilize after-tax income. An experienced fund manager can curate a strategy to provide stronger after-tax returns than traditional market options can offer.
The BondBloxx IRM Tax-Aware Short Duration ETF+ (TAXX ) does just that. The fund aims to help investors lock in after-tax income, along with capital preservation.
TAXX offers investors a diversified portfolio, with at least half of the fund’s assets allocated to municipal bonds. Recent BondBloxx literature highlights that the asset class “offers compelling after-tax relative value, and we recommend increase allocations to the sector.”
A sizable portion of TAXX assets are also allocated toward taxable short-duration bonds. The variety of fixed income assets within the fund’s portfolio provides broad opportunities to lock in after-tax returns.
To locate assets that fit the fund’s goal, TAXX’s fund managers apply a disciplined, bottom-up approach to security research. Potential portfolio additions much pass a fundamental credit analysis, while possessing liquidity and strong after-tax relative value. This is all done to create a diversified, high-quality portfolio of fixed income instruments.
Within TAXX’s portfolio, the majority of assets have maturities ranging between less than a year to three years. This shorter maturity can help investors capture returns while mitigating volatility from potential long-term rates.
TAXX’s strategy is already showing off good tax-efficient returns. As of May 31st, 2024, the fund has a tax equivalent yield of 6.11%. The fund launched just over three months ago and has already accumulated over $39 million in fund flows since then.
This fund highlights how investors can achieve both after-tax returns and asset diversification within a single fixed income portfolio. With an active management team manning the helm, TAXX can navigate interest rates and credit spreads to bring investors yield and capital preservation.
For more news, information, and analysis, visit the Institutional Income Strategies Channel.
