U.S. municipal bonds have had a spectacular first half of the year. As of July 1, they returned 6.2 percent on a tax-adjusted basis, compared to the 2.7 percent for the S&P 500 Index, placing them among the top performers of 2016 so far. Last month was munis’ best June performance since 2000, according to Bloomberg, spurred largely by negative bond yields around the globe and investor uncertainty following the Brexit referendum in the U.K.
Inflows have been robust. Between January and May of this year, more than $27.2 billion in new cash flowed into muni bond mutual funds, according to the Investment Company Institute (ICI). That’s a huge step up from the $8.4 billion during the same period last year.