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Schwab offers four Pimco muni bond strategies


Charles Schwab is offering four municipal bond ladder separately managed account strategies managed by Pimco.

The strategies are designed for fixed income investors seeking tax-advantaged solutions and income generation as well as ongoing professional management.

According to a recent Schwab study, 55 to 70 year old investors are more concerned with income generation and principal preservation than portfolio growth when compared to younger investors.

Laddering municipal bonds involves buying municipal bonds that mature at staggered future dates to help minimise overall exposure to interest rate fluctuations while providing tax-exempt income.

The Schwab-sponsored Pimco SMAs employ a professionally managed buy-and-hold strategy with a focus on investment selection and ongoing credit monitoring. Investors work with their Schwab consultant or an independent investment advisor to select from four municipal bond ladder strategies that use Pimco’s bond selection expertise.

The SMAs have an investment minimum of USD250,000 and a programme management fee of 0.35 per cent for the first USD1m invested, 0.30 per cent for the next USD4m and 0.25 per cent for investments above USD5m.

"The new municipal bond ladder SMA strategies were built to make investing in fixed income easier and more transparent, while offering professional ongoing management by Pimco," says Andy Gill, senior vice president of fixed income at Schwab. "Because of continued market volatility and the distinct possibility of tax hikes, we are seeing more investors looking for ways to protect their retirement portfolios and generate predictable, tax-advantaged income."

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