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RETIREMENT PLAN INVESTOR

Use your plan ID (available on your account statement) to determine which employer-sponsored retirement plan website to use:

IF YOUR PLAN ID BEGINS WITH IRK, BRK, 754, 1 OR 2

Visit americanfunds.com/retire

IF YOUR PLAN ID BEGINS WITH 34 OR 135

Visit myretirement.americanfunds.com

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Categories
Municipal Bonds
Municipal bonds can add more to core — 4 facts investors need to know

In the late innings of an equity bull market, it’s especially important to consider portfolio diversification and the role of core fixed income.


Municipal bonds are a viable option for core fixed income portfolios. Here are four facts investors need to know about the asset class:


1. Income seekers can find attractive relative value.


The after-tax income potential of municipal bonds outshines comparable taxable bonds.


Taxable-equivalent yields


2. Municipal bonds offer powerful diversification potential.


The near-zero historical correlations of municipal bonds with equities suggest their addition to equity-heavy portfolios can have a diversifying effect.



3. The market is vast, with diverse opportunities.


Puerto Rico and Illinois have been in the news for their troubles. However, revenue bonds make up a large part of the municipal market and have little connection to troubled state and local government finances. Revenue bonds are issued by entities such as hospitals and toll roads and, as the name suggests, are backed by their revenue streams.


3 of the most actively traded bonds in July 2017


4. The market's structure can favor investors with scale.


Individual investors typically have limited access to bond deals, and most bonds trade infrequently. In contrast, organizations such as Capital Group can buy and sell bonds worth millions of dollars at a time. Bond funds (or, indeed, separately managed accounts) that take a selective approach to investing can offer investors a relatively liquid and diversified way to access the asset class.


muni market snapshot



Past results are not predictive of results in future periods.

Bloomberg® is a trademark of Bloomberg Finance L.P. (collectively with its affiliates, “Bloomberg”). Barclays® is a trademark of Barclays Bank Plc (collectively with its affiliates, “Barclays”), used under license. Neither Bloomberg nor Barclays approves or endorses this material, guarantees the accuracy or completeness of any information herein and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.

The S&P 500 Composite Index (“Index”) is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Capital Group. Copyright © 2018 S&P Dow Jones Indices LLC, a division of S&P Global, and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC.

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Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.

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This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.