After a year marked by early uncertainty and underperformance, the municipal bond market has rallied, offering investors attractive yields and renewed opportunity as 2025 draws to a close. In this episode, host John P. Bryson welcomes Adam for a timely discussion on what’s driving performance in the municipal bond market.

Adam shares his perspective on how supply dynamics, investor flows, and sector trends are shaping the market. He also discusses why entry points matter and how active management can add value in today’s environment. Here’s a sneak peek into the conversation:

1. Why should investors have tax-free municipal bonds in their portfolio?
   Adam: Municipal bonds work well for investors who are looking for tax-free income. Adding stability to your portfolio using municipal bonds helps offset the volatility of equity holdings. Especially when it may seem like we’re heading toward a slowdown, these instruments tend to perform slightly better than other fixed-income instruments. Municipal bonds help provide a long-term income stream for investors.

2. What have been the major developments in the municipal bond market in 2025?
   Adam: We started the year with weak performance, with municipal bonds underperforming corporates and Treasuries. There was an excess supply, over and above what we saw in 2024. This was driven by delayed infrastructure projects, which finally got funded, and costs went up. In the past two to three months, flows have improved, and returns are looking solid. Supply and demand have lined up. We expect solid returns in November and December, with good flows and lower supply offering support.

3. What are the biggest opportunities in the municipal bond market today?
   Adam: The municipal bond market is generally offering attractive yield levels currently. We like the intermediate to long space because the curve is steep and income is high, but we’re avoid going too long due to volatility. Credit spreads within the municipal bond market have widened, so there’s room for tightening. Lastly, we also see value in bonds subject to Alternative Minimum Tax, low-coupon bonds, and sectors like airports, which tend to issue at wider spreads and have strong fundamentals.