Vanguard’s Malloy Says Crossover Buyers Are Key to Muni Recovery

Muni market on track for worst performance in decades
Banks, insurance companies helped drive rally in spring 2022

Paul Malloy, Vanguard’s head of municipals, says municipal bonds are in the best fundamental shape they’ve been in decades. He speaks with Taylor Riggs on “Bloomberg Markets: The Close.”

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By Amanda Albright

September 28, 2022 at 4:28 PM UTC

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Paul Malloy, who oversees roughly $211 billion of municipals at the Vanguard Group Inc., says conditions are ripe for a recovery from this year’s steep muni selloff.

Buyers known as “crossover investors” that usually acquire taxable securities could jump in to take advantage of cheap valuations, once again aiding in the securities’ recovery, Malloy said. The muni market has tumbled 12% year-to-date, and if that drop holds it would be the worst performance since at least the 1980s, according to Bloomberg indexes.