Munis Top Stocks on Value by the Most in Decades, MacKay Says

Tax-exempt municipal bonds are offering compelling value compared to equities, according to a new report by MacKay Municipal Managers.

The firm, the muni investment arm of MacKay Shields, found that after accounting for taxes, muni yields exceed the S&P 500 earnings yield by about 244 basis points, a gap not seen since 2001-02. The earnings yield, often used as a proxy for what shareholders earn on stocks, has fallen as equity valuations climb.