The study report says that corporate bonds may offer higher yields than comparable municipal bonds, but UHNW investors seem to feel they have more to gain from investing in federally tax-exempt municipal bonds in the current economic environment.
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Close of half – 46%- of the UHNW investors surveyed in the fourth quarter reported owning individual municipal bonds for an average balance of US$500,000. In contrast, individual corporate bonds are held by 37% of investors, who report for an average balance of US$358,000.
According to the report, UHNW investors are switching over to municipal bonds as they are struggling with stock market volatility, global economic tensions and tax uncertainty.
The vast majority of UHNW investors feel that significant tax increases are inevitable in the near future, and they admitted using municipal bonds as part of a tax-advantaged strategy.
Investing more in bonds ranked as the top response to the current economic environment. One-fourth (25%) respondents said they have purchased additional bonds, while 23% have reduced their debt and 17% have saved more.
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By GlobalDataAccording to publishers of the report, purchasing real estate was the fourth-most common response to prevailing economic conditions.
Bonds appeal the most to professionals and advisor-assisted investors, the report added.
