Municipals topped the list of best performers of 2015, with risk adjusted returns besting other fixed income asset classes and the S&P 500 Index, alike. A turbulent year, 2015 was riddled with geopolitical strife, downturns in the global stock markets, the slumping price of oil and the highly anticipated first rate hike by the U.S. Federal Reserve in almost 10 years. Defaults fell for a fifth straight year as increased revenues and cost cutting measures have contributed to stronger financials for state and local governments. Nationally, total state tax revenue recovered more than two years ago from its plunge in the Great Recession. By mid-2015, states collectively took in 5.6 percent more tax revenue than they did at the 50-state peak in the third quarter of 2008, after accounting for inflation and seasonal fluctuations as reported by Pew Charitable Trust. The last two years have ended with Municipals at the top of the list of best performers, in our opinion offering an attractive relative value and lower volatility in an uncertain market. Click here to read the latest quarterly commentary.
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