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High-Yield Munis Win in 2018, but Risks Remain

The category was the the third best performing of the year, but careful and prudent active management is ever important.

Alaina Bompiedi: 2018 was a trying year for both equity and bond markets, with just a fifth of the Morningstar categories posting gains. Within that exclusive winner's circle was the high-yield muni category, which returned just over 2%, making it the third best performing category for 2018.

The relative success of high-yield munis during a time of stock and bond market weakness could make it attractive as a portfolio diversifier. But to know if it's appropriate for your portfolio, it is imperative to understand the that factors drove the category's 2018 performance, and the risks embedded within it.

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