Seeds of success: Pots of Profit

Published: April 9, 2024

For clients of Crescent Grove Advisors in the top tax bracket, municipal bonds typically account for 40-60% of fixed income exposure. A balanced 60/40 equity/bond portfolio would therefore have an allocation to munis of 16-24%.

‘Since rates began moving higher in 2022, our municipal allocations have generally increased for clients in the top tax bracket,’ says Andrew Krei, co-chief investment officer of the firm which has offices in Milwaukee, Wisconsin, Lake Forest, Illinois and Atlanta, Georgia.

‘For more conservative clients with existing municipal bond allocations that may have meant a 10-20% incremental increase in fixed income. For clients who had been more aggressive with their fixed income portfolios during the low interest rate environment that may have meant a brand new allocation to municipal bonds given the more attractive yields on offer.’

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