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Keeping A New York State In Mind Thumbnail

Keeping A New York State In Mind

We are launching a New York Focus Portfolio Series for our New York clients who are seeking tax-advantaged income.

Our New York Focus Portfolio Series will include municipal bonds issued only by New York state, local, and regional government authorities. The interest income earned can be exempt from both Federal and State personal income taxes. And as an added bonus, New York City residents have the opportunity to earn interest that is exempt from New York City personal income taxes.  Yes – triple tax exempt!

These bonds are a great option for New York residents looking to:

  • Reduce the amount of interest income that is subject to personal state and local taxes
  • Improve after-tax returns
  • Generate current income with relatively low risk

Key Benefits to New York Residents Investing in our New York Focus Portfolio Series:

  • Tax Savings
    • State and, possibly, local tax-exempt status
    • Income not subject to Alternative Minimum Tax (AMT) calculations
    • Low or no distributed capital gains taxes
  • Strength and Stability
    • Municipal bonds are backed by the financial stability and taxing authority of the municipal issuer
    • The State of New York is rated AA+ by the major rating agencies; the City of New York is rated AA
    • Both are considered high-quality borrowers with stable outlooks
  • Fund Manager Diversification
    • We are selecting funds across four well-known and seasoned fund managers including:
      • Vanguard
      • JP Morgan Asset Management
      • Dimensional Advisors
      • iShares by Blackrock
  • Holdings Diversification
    • The municipal bond funds we have selected collectively hold over 12,000 individual bonds across a range of maturities across a spectrum of issuers
  • Fostering Local Growth
    • Investing in New York municipal bond funds can also provide New York residents with the opportunity to support essential public projects and infrastructure developments in their own communities

We believe our New York Focus Portfolio Series offers tax advantages that can be compelling for our New York clients in high tax brackets.  

For Non-New York Residents:

Non-New York residents can rest assured that our current portfolios designed for taxable accounts hold municipal bond funds that earn interest income that is exempt from federal personal income taxes.

  • Strength and Stability
    • We select fund managers that only purchase bonds from highly rated issuers with ratings averaging AA
  • Municipal Bonds Can Help Diversify Your Portfolio
    • Municipal bonds are domestically focused, while many stocks have global exposure and are more sensitive to macroeconomic developments
  • Municipal Bonds are Well Positioned to Withstand a Recession
    • Many municipalities exited the pandemic with strong balance sheets thanks to billions of dollars in federal aid
    •  It is common for municipal bonds to back essential services, such as sewer, water, and garbage collection.
      • If recession strikes and money is tight, consumers may give up discretionary services, but not basic necessities
  • Municipal Bonds Could Help Investors Keep More of their Returns on an Absolute Basis
    • As of March 31, 2024, municipal bonds were yielding 3.49%.
    • The tax-equivalent yield (the return required on a taxable bond to make it equal to the return of a tax-exempt bond) would increase to 3.88% for investors in the lowest tax bracket and 5.90% for investors in the highest tax bracket

Please contact your advisor if you would like to learn more.