Municipal Bonds and the Power of Compounding Coupons


Barnet Sherman, director and portfolio manager of the TIAA-CREF Tax-Exempt Bond Fund, is a regular contributor to the Intelligent Investing series on In his latest post, Barnet explains how our intuition can sometimes lead us astray when thinking about what drives the total returns in a bond portfolio. Looking at the performance of municipal bonds over the last 13 years, coupons have contributed more to total returns than price appreciation, which may seem counterintuitive given the steady decline in interest rates over that period. To learn more about the return drivers of municipal bonds and the power of compounding coupons, read Barnet’s latest post.