Our investment process is predicated on identifying risks and receiving adequate compensation for that risk. While we do share the view that the Los Angeles Department of Water & Power (and related entities) is a systemically important issuer as the largest municipal utility in the country, with access to liquidity and potential support from the state. We do not, however, have any clarity, nor does anyone else, on the magnitude of their potential liability from the 2025 fires and the resulting impact to their credit rating.

Municipal bonds have now delivered solid returns, for the past three consecutive years, resulting in over +13% returns cumulatively, or +4.00% annually, as of 1/19/26, according to the Bloomberg Muni Index.

If your municipal bond manager didn’t proactively harvest meaningful losses via tax loss swapping during the first half of 2025, you likely missed out on one of the best opportunities in the past three years to protect your broader asset allocation from capital gains taxes. For this reason, we are providing important information below that, going forward, we believe can help municipal bond investors maximize their total after-tax return.

We are very proud to share that a highly valued member of the Clinton Investment Management team, Alexander Clinton, has been bestowed with Smith’s Research & Gradings 2025 Rising All-Star Municipal Analysts Award.

The municipal bond market is enjoying its third consecutive year of meaningfully positive total return, 12% on a cumulative basis, since 2023. CIM’s strategies have delivered meaningfully higher returns both net-of-fees and after taxes.

The positive narrative shift and constructive outlook for the municipal bond market has resulted in the best total return for October in over 30 years.

The Fed’s caution, while understandable given the uncertainty surrounding public policy and global macroeconomic conditions, has further dampened economic growth, which will likely require the Fed to reduce interest rates more.

On Friday, July 4th, 2025 (Independence Day), President Trump signed the “One Big Beautiful Bill Act” (OBBBA) into law, a day after its passage by Congress. This massive piece of legislation, a cornerstone of the President and Republican Party’s agenda, extends expiring provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 and incorporates other tax priorities of President Trump. It also outlines spending reductions and revenue-raisers to partly offset the estimated cost of the aforementioned tax provisions.

While it is often difficult in times of uncertainty and market stress to take advantage of market dislocations like we are seeing now, history has shown that doing so can be a meaningful source of wealth creation as investors seek to reach their long-term investment goals in the years ahead.