How This Tax Exempt ETF Can Boost Portfolios

Core Insights - The S&P 500 has risen more than 14% year-to-date, leading to significant gains for many investors, prompting a need for tax reduction strategies [1] - TAXF, the American Century Diversified Municipal Bond ETF, offers a tax-exempt investment option with a 27 basis point fee, focusing on both high yield municipal and investment-grade bonds [1] - The fund has returned 4.1% year-to-date and has a yield to maturity of 4.2% as of October 31, outperforming its category average [1] Tax Benefits - TAXF provides two main advantages: reducing tax exposure for portfolios and offering an upgrade over passive municipal bond funds [2] - The active management of TAXF allows for quick adaptation to market changes, unlike passive funds that may struggle with early bond calls or defaults [1] Performance and Strategy - The fund allocates up to 35% of its portfolio to riskier securities, depending on market conditions, enhancing its performance potential [1] - Active ETFs like TAXF leverage fundamental research to identify promising issuers, which can lead to better outcomes in riskier areas [1]