Vanguard Tax-Exempt Bond Index Fund

VTEB

Market cap $43B

For decades, the playbook for high-income investors was almost reflexive: put municipal bonds in your taxable account, put Treasuries and corporates in your IRA.

A $75,000 salary sits at the top of the U.S. median household range, but for a retiree in a high federal and state bracket, replacing it with taxable income means earning much more before Uncle Sam takes his cut.

Bloomberg's Aashah Shah joins Scarlet Fu on "Bloomberg Real Yield." May has been a strong month for muni bond issuance, with about $35 billion of sales so far this year.

There is an old saying in investing that a portfolio is like a bar of soap: the more you touch it, the smaller it gets.

High-bracket retirees face a math problem that taxable bond funds cannot solve: every dollar of interest income gets taxed at the federal marginal rate, often layered with a state tax bite.

For investors in the top federal tax bracket, the Invesco National AMT-Free Municipal Bond ETF (NYSEARCA:PZA | PZA Price Prediction) offers something rare: a monthly paycheck the IRS cannot touch.

March's bout of geopolitical volatility affected investment approaches of all kinds, and municipal bonds were unfortunately no different. As just one example, the Bloomberg Municipal Bond Index fell more than 2% on the month, as the fixed income asset struggled to retain its safe haven reputation.

AI-driven electricity demand is forcing a decade of infrastructure spending into five years. The municipal bond market is becoming a primary financing channel for that buildout, creating income opportunity.

Your retirement check is about to get squeezed by a Fed civil war you did not vote for.

VTEB is one of the largest municipal bond ETFs in the market, with a tax-advantaged 3.3% dividend yield. VTEB holds high-quality, AA-rated municipal bonds with moderate-to-high rate risk and minimal. Although the headline yield is low, after-tax income seems above-average, at least for investors in taxable accounts in the higher tax brackets. VTEB compares unfavorably to several of its peers, including FLMI and BOXX.