Reach for Higher Yields With This Active Muni ETF

Core Viewpoint - The U.S. Federal Reserve's recent interest rate cut and the potential for further cuts create an opportunity for fixed income investors to seek higher yields through active management, particularly with the MFS Active Intermediate Muni Bond ETF (MFSM) [1][2][3]. Group 1: Interest Rate Environment - The CME Group FedWatch indicator predicts over a 90% chance of additional rate cuts in October and December, indicating a trend towards easing monetary policy [2]. - Federal Open Market Committee member Christopher Waller anticipates further cuts in the next three to six months, driven by incoming economic data [2]. Group 2: Investment Strategy - The downward pressure on yields from cash provides an opportunity for investors to reallocate towards intermediate maturity municipal bonds, which can offer higher income on both absolute and tax-equivalent bases [3]. - The MFS Active Intermediate Muni Bond ETF focuses on intermediate maturity municipal bonds, which are advantageous in the current interest rate environment [3]. Group 3: Benefits of Municipal Bonds - Municipal bonds offer federal tax-free income and stronger credit fundamentals compared to riskier corporate debt, making them an attractive investment option [3][4]. - The investment case for municipal bonds is supported by strong credit fundamentals and attractive yields, emphasizing the importance of active management in this fragmented asset class [4]. Group 4: Active Management Expertise - The MFS Active Intermediate Muni Bond ETF is managed by a team with extensive experience in municipal bonds, which is crucial for navigating the complexities of this market [5][6]. - MFS has been investing in municipal bonds since the 1970s, leveraging a 20-member team that includes legal experts to enhance their investment strategy [6].