Many of the same macro factors that supported the muni market in 2015 like modest inflation, manageable supply and consistent demand will continue throughout 2016, said Dusty Self, portfolio manager for the RidgeWorth Seix Short-Term Municipal Bond Fund (SMMAX). 'As investors keep looking for tax free income, the overall credit fundamentals of the muni market will remain stable and the asset class will outperform again in 2016,' said Self. The RidgeWorth Seix Short-Term Municipal Bond Fund is up 35 basis points thus far in 2016, according to fund-tracker Morningstar. The $39 million fund has returned an average of 2.7% annually over the past five years, outpacing 84% of its peers in Morningstar’s muni national short-term category. The fund’s trailing 12 month yield is 22 basis points, according to Morningstar, and 71% of the bonds in the fund will mature between one and three years. As for the Federal Reserve’s impact on the muni market, Self said she expects at least one rate hike this coming year, yet she does not expect it to significantly affect municipal bond fundamentals.
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