Municipal bonds are often viewed as a stable yet overlooked corner of the fixed-income market. At Alvarez & Marsal Private Wealth Partners (AMPWP), we see these securities through a different lens—one that transforms them into a powerful cornerstone of wealth preservation and tax advantaged income for ultra-high-net-worth (UHNW) clients. By applying an institutional total return mindset to this often-underutilized asset class, we aim to uncover value, capitalize on inefficiencies, and deliver tailored outcomes for our clients.

 

 

Rethinking the Separately Managed Municipal Bond Portfolio

Representing a $4 trillion segment of the U.S. fixed-income market, municipal bonds offer stability, tax efficiency, and reliable income.1 Yet the market remains dominated by retail-driven inefficiencies, from hidden trading costs to suboptimal passive strategies. These structural issues often erode returns, leaving UHNW investors underserved. At AMPWP, we view this as an opportunity to innovate.

Our strategy goes beyond the traditional tax-exempt income focus. We tailor municipal bond portfolios to meet the financial objectives of our clients in separately managed accounts. Whether preserving generational wealth, optimizing after-tax returns, or creating a stable foundation for higher-risk investments, our municipal bond strategies are designed with purpose.

 

An Institutional Approach to Actively Managing Separately Managed Accounts

Municipal bond portfolios are often treated as static instruments, built on ladders of predictable cash flows, and left to run their course. While this approach may provide stability, it misses the dynamic potential of active management. At AMPWP, we believe in unlocking the full value of municipal bonds through strategies such as:

  • Yield Curve Positioning: Identifying and exploiting undervalued maturities and structures during market dislocations.
  • Situation Based: Capturing opportunities during periods of market stress, such as acquiring high-quality bonds at distressed prices during the COVID-19 pandemic.
  • Tax-Loss Harvesting: Turning market volatility into tax-saving opportunities, while reinvesting proceeds into higher-yielding securities.

Our methodology adapts to changing market conditions, ensuring that portfolios remain resilient and forward-looking. We leverage advanced analytics, proprietary modeling, and macroeconomic insights to deliver optimized results, even in complex market environments.

 

A Collaborative, Iterative Process

Building a municipal bond portfolio for our clients is an iterative process. We are not in the business of selling prepackaged strategies or “portfolios of the day.” Instead, we engage in an ongoing dialogue to fully understand each client’s unique risk profile and investment horizon. Is the portfolio intended for generational wealth preservation? For providing long-term stability? For meeting targeted liquidity needs?

Asking these questions is as important as constructing the portfolio itself. Each portfolio is guided by investment principles that can be customized to align with specific client goals. With this roadmap, we develop tailored portfolios that ensure both the client and investment management team have a clear understanding of the objectives.

 

 

Transparency as a Fiduciary Imperative

Transparency in the municipal bond market can be elusive, with hidden markups and opaque pricing mechanisms often distorting outcomes. At AMPWP, transparency is central to our philosophy. Every bond we purchase is executed at cost, with no hidden fees or markups. Clients pay a single asset management fee, which covers all trading costs and ensures alignment with their best interests.

This clarity is crucial in a market dominated by retail inefficiencies. By bypassing intermediaries and maintaining direct relationships with the broker/dealer community, we achieve competitive pricing and seamless execution. Transparency is not just a principle—it builds trust and keeps more of our clients’ capital invested for the long term.

 

Why Municipal Bonds Deserve More Attention

Municipal bonds have earned their reputation as an attractive asset class due to their strong historical performance on a risk-adjusted basis and exceptionally low default rates. While often perceived as a conservative and stable investment—boasting a ten-year default rate of just 0.09% compared to 2.23% for global corporate bonds2 — the municipal market offers far more than meets the eye. Its diverse sector selection and complex security structures create compelling investment opportunities that demand professional management.

In today’s high-tax environment, the tax-exempt income provided by municipal bonds is particularly valuable. However, many managers take a passive approach, viewing municipal bonds as a set-it-and-forget-it allocation. At AMPWP, we challenge this perception. By applying an institutional total return strategy, we uncover opportunities to enhance performance. This proactive approach not only optimizes returns but also allows clients to take calculated risks elsewhere, confident that their municipal bond holdings provide a dependable foundation.

 

The Value of Building a Fixed Income Team from the Ground Up

One of the most rewarding aspects of my role at AMPWP has been the opportunity to build a team and develop an investment strategy unburdened by institutional constraints. Our entrepreneurial approach—complemented by access to the extensive resources of Alvarez & Marsal (A&M) when needed—allows us to reimagine how separately managed municipal bond portfolios serve UHNW clients. A key element of this strategy is our strategic relationship with A&M Tax, which provides integrated tax solutions tailored to the complexities of our clients’ holdings.

A&M Tax takes a multidisciplinary approach to tax strategy, offering seamless planning, compliance, and family office services. Unlike traditional tax advisory firms constrained by audit-based relationships, A&M Tax provides independent, conflict-free guidance. Their expertise spans local, national, and international tax landscapes, equipping clients with sophisticated strategies to navigate evolving regulations.

Our team, composed of seasoned professionals in portfolio management, credit analysis, and trading, brings decades of municipal bond market experience. This expertise, combined with our highly customized approach, enables us to construct municipal bond portfolios that align with the distinct financial objectives of UHNW clients.

 

Looking Ahead

The municipal bond market presents opportunities for meaningful innovation. By integrating active management with client-focused service, AMPWP is redefining what’s possible in this space. Our mission is to preserve and grow wealth—empowering clients to achieve their broader financial goals with clarity and confidence.

As we expand our capabilities, our focus remains on delivering disciplined management, research-driven strategies, and transparent processes. At AMPWP, municipal bonds are more than an asset class; they are a foundation for enduring financial legacies.