American Century runs municipal tax-loss harvesting as yields hit highs
Portfolio manager Joe Gotelli says the firm has been improving income distribution across its municipal portfolios.
At a glance
American Century Investments is running tax-loss harvesting trades across its municipal portfolios to capture value from a yield backup, portfolio manager Joe Gotelli said.
Absolute and tax-equivalent yields have reached multi-decade highs, pulling retail and crossover investors into munis, according to the interview.
The firm's goal "in the last couple of weeks," he said, has been improving income distribution across all of its portfolios in the more attractive yield environment.
American Century Investments is running tax-loss harvesting trades across its municipal portfolios to capture value from a yield backup, portfolio manager Joe Gotelli said. The yield backup has drawn fresh buyers into the market, Gotelli said in an interview published Oct. 20 by ETF Trends.
Absolute and tax-equivalent yields have reached multi-decade highs, pulling retail and crossover investors into munis, according to the interview. Gotelli said the category has seen "some record volume days," with institutional accounts like American Century's and retail investors "extracting value in the market by executing tax loss harvesting trades."
The firm's goal "in the last couple of weeks," he said, has been improving income distribution across all of its portfolios in the more attractive yield environment. He described the market's negative total returns as predominantly rate driven rather than credit driven, despite headlines around certain credit events, and said higher yields let managers avoid reaching for credit risk.
Gotelli said the firm had previously emphasized the rich belly of the curve, but that more opportunities have emerged in other areas, letting managers use more complex structures to add positive convexity to portfolios.
American Century offers several muni ETFs, including the American Century Diversified Municipal Bond ETF, which trades as TAXF.
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