A variety of asset classes and corners of the equity market have, at various points, worn the "Trump trade†label. Bitcoin has been among the leaders in that clubhouse. In terms of what the president himself is buying, that's a different story. Indicating that the president's tastes for his personal investments are somewhat cautious, the ALPS Intermediate Municipal Bond ETF (MNBD) could be one of the ETFs investors can use to mimic some of the president's investment selections. MNBD Could Be Interesting Trum ...

Core Viewpoint - The Federal Reserve's recent interest rate cuts create opportunities for fixed income investors, particularly in municipal bonds and ETFs like the ALPS Intermediate Municipal Bond ETF (MNBD), which offer relative security and potential yield advantages. Yield Opportunities - Municipal bond yields are sufficiently attractive for investors, making them a viable option, especially with MNBD [2] - For top tax bracket investors, a municipal yield of 3.5% equates to approximately a 6% yield on taxable bonds, highlighting the tax advantages of munis [3] Credit Quality - Approximately 70% of municipal bonds are rated AAA or AA, indicating a high level of credit quality, which is appealing for credit-conscious investors [4] Market Dynamics - Total returns for municipal bonds faced challenges earlier in the year due to supply-demand imbalances and market volatility, but a more favorable supply-demand situation is anticipated moving forward [5] Diversification Benefits - Municipal bonds provide diversification benefits, particularly for investors with significant equity or Treasury holdings, as they can help reduce overall portfolio volatility [6][7]

Core Insights - The bond market is experiencing enthusiasm among fixed income investors due to Federal Reserve easing, with municipal bonds gaining significant attention this year [1]. Group 1: Municipal Bond Market Dynamics - Municipal bonds have faced challenges such as high issuance, declining demand, narrowing credit spreads, and underperformance compared to Treasuries of similar durations [2]. - Some analysts believe that the worst is over for municipal debt, indicating potential opportunities, particularly highlighted by the 30-year muni/Treasury ratio [3]. Group 2: Muni/Treasury Ratio Analysis - The 30-year muni/Treasury (M/T) ratio typically ranges from 80% to 90%, with values above 100% indicating favorable conditions for municipal bonds. Currently, the ratio is approaching 90%-95%, suggesting good value for investors willing to accept some interest rate risk [4]. Group 3: Active Management of MNBD - The ALPS Intermediate Municipal Bond ETF (MNBD) benefits from active management, providing flexibility in a market where passive funds are prevalent. This is particularly advantageous as the muni yield curve has flattened following the Fed's rate reduction [5]. - Experienced municipal bond portfolio managers see attractive values in the market, suggesting that volatility can present compelling investment opportunities, especially in underappreciated segments [6]. Group 4: Performance of MNBD - MNBD has outperformed the largest ETF in its category this year, indicating its potential to join successful active muni ETFs that have performed well across various interest rate cycles [6]. - Historical performance shows that active muni funds have fared well during periods of market volatility, with better volatility-adjusted results compared to peers over five- and ten-year periods [7].

Core Viewpoint - Risk-averse fixed income investors are increasingly considering municipal bonds due to expectations of ongoing monetary easing by the Fed, with a focus on the fiscal health of issuing states and cities [1][2]. Group 1: Fiscal Health of States - Many states are entering the next fiscal year with reserve levels that are twice as strong as their historical average, indicating robust financial health [2]. - State budget reserves totaled $327 billion at the end of fiscal 2025, representing 25.2% of state spending, which is significantly above the long-term average of 9.6% since 1979 [5]. - Revenue growth has consistently outperformed forecasts, with state revenues collectively beating budgets by 2.2% in 2025, marking the fifth consecutive year of revenue outperformance [5]. Group 2: Investment Opportunities in Municipal Bonds - The ALPS Intermediate Municipal Bond ETF (MNBD) may benefit from the solid financial footing of states, allowing for strategic investment in stronger municipalities while avoiding those with significant fiscal challenges [4]. - Despite some states facing deficits and potential recessions, the overall trend in larger states shows positive revenue collection, such as California exceeding expectations by 2.4% and Illinois collecting $700 million more than budgeted [5]. - A cautious approach to municipal bonds through actively managed funds like MNBD can provide exposure while mitigating risks associated with weaker fiscal jurisdictions [4][3].

Core Viewpoint - Municipal bonds have shown limited performance this year, contrasting with the overall positive trend in aggregate bond indexes, suggesting a potential opportunity for investors to revisit this market segment [1][2]. Group 1: Market Performance - The ICE AMT-Free US National Municipal Index indicates that municipal bonds have not performed significantly this year, despite other bond indexes trading higher [1]. - The ALPS Intermediate Municipal Bond ETF (MNBD) is highlighted as a potential investment opportunity, particularly due to its active management approach, which allows for quicker responses to market changes [2][3]. Group 2: Investment Opportunities - There are several tailwinds that could enhance the performance of MNBD, including the potential for multiple interest rate cuts by the Federal Reserve and an anticipated increase in demand for municipal debt [4]. - Goldman Sachs Asset Management (GSAM) anticipates increased demand for municipal bond investment vehicles as investors look to reinvest new capital and take advantage of cheaper valuations in the market [5]. Group 3: Market Fundamentals - Despite challenges such as a significant increase in new issuances not being met with strong demand, the fundamentals of municipal bonds remain attractive, with resilient credit quality and historically high rainy day fund balances [6][7]. - GSAM notes that the foundational elements of the municipal bond market are favorable, with compelling yields and robust credit fundamentals, suggesting a positive outlook for the second half of the year [8].