Demand for municipal bond exchange-traded funds (ETFs) and mutual funds reached record levels during the first four months of 2019.  In fact, all four months individually ranked in the top 10 for monthly net inflows over the past 25 years (see Table 1 below).  At first glance, strong demand for tax-free funds may seem counterintuitive following President Trump's tax reform legislation enacted in December 2017.  However, we believe the specifics of tax reform, especially for high-tax states, combined with municipal bond supply dynamics and relatively strong fundamentals may continue to drive demand—and returns—for municipal bond ETFs and mutual funds.

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