Investors Opt for Municipal Bonds — as Stocks and Commodities Plunge

Municipal bonds are getting a boost as investors look for stability after international and domestic equity markets tumbled.

“A lot of things are going right for our asset class here at the beginning of the year,” Jim Colby, senior municipal strategist and portfolio manager at Van Eck Global, said in an interview on Tuesday. Municipals are benefitting from the asset reallocation by investors after the Chinese stock market sold off on concern over an economic slowdown, he said.

The Dow Jones Industrial Average on Jan. 13 was down almost 10% from its highs of late last year, as investors flocked to safer assets.

“With China seemingly in a downward spiral having suspended their stock trading and with oil seemingly in a free fall, and equities down 5% to 6% at the start of the year, some advisors are saying [municipal bonds] are a spot of choice – at least right now – not just domestically, but worldwide,” Colby said.

“Given everything that is happening right now, the muni marketplace with its low volatility and high credit quality has to remain right up there at the top of anyone’s list as the asset of choice,” Colby said.

Read more: Bond Buyer.

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