Municipal Fixed Income Commentary 1Q2011

The tax-exempt market continued to experience negative net outflows throughout the 1st Quarter 2011, as retail investor sentiment remained cautious due to the ongoing negative press regarding municipal credits. Despite the heightened price return volatility, the Barclays Municipal Index ended the quarter in positive territory, with a 0.51% return. Cross-over and large institutional accounts once again took advantage of the recent selloff and purchased municipal bonds at very attractive relative yields.