- posted 10 years ago
Build America Bonds (BAB) are a relatively new type of municpal bond that pay interest that is fully taxable to the investor but which is subsidized on the issuer side by the federal government. An investor interested in taxable bonds (either because he is in a low tax bracket or because he has a tax-deferred account) ought to consider BABs.
Are there are corporate/government taxable bond funds that also invest in BABs? There exist one or two BAB mutual funds and ETFs, but I'd prefer that a taxable bond manager choose the weights in Treasuries, agency bonds, corporate bonds, and BABs.