Franklin Templeton Reports Stronger Muni Issuance and Favorable Duration Positioning
Franklin Templeton's second-quarter 2026 commentary on its municipal bond SMA notes that new muni issuance ran more than 8% ahead of the prior year. The strategy benefited from duration exposure, especially an overweight to 10- to 20-year maturities as the long end of the muni curve outperformed. It argues that municipal valuations remain attractive versus other fixed-income sectors, particularly for tax-sensitive investors.
Franklin Templeton published this commentary on September 27, 2026, covering its Franklin Municipal Ladder 5-20 Year SMA for the second quarter of 2026. The commentary is attributed to Franklin Templeton, part of Franklin Resources (NYSE: BEN), a global asset manager.
During the quarter, municipal bond supply grew by over 8% year over year. The strategy’s interest-rate sensitivity helped relative performance, especially its larger allocation to 10- to 20-year maturities, as longer munis outperformed. The benchmark 10-year Treasury yield ended the period 15 basis points higher. Franklin Templeton views muni valuations as appealing versus other fixed-income areas, especially for investors concerned about taxes.
If issuance remains elevated, state and local governments may have greater access to funding for public projects. Tax-sensitive investors, including retirees, could find municipal bonds relatively appealing for income. Changes in interest rates or credit conditions may alter those potential benefits, affecting savers, issuers, and the communities they serve.