Baird Municipal Bond Funds Win 2026 Lipper Awards

Awards are based on performance through November 30, 2025, using Lipper’s proprietary quantitative methodology. For more on Lipper’s methodology, click here.

Both Funds are co-managed by Duane McAllister, CFA,  Lyle Fitterer, CFA, Erik Schleicher, CFA, Joe Czechowicz, CFA and Gabe Diederich, CFA.

This is the seventh year in a row that our municipal team has been recognized with a Lipper Award. It speaks to the depth of experience across the team, their disciplined process, and their continued focus on delivering consistent results for clients.

Mary Ellen Stanek, CFA, Baird Advisors Chief Investment Officer Emeritus and Baird Funds President

We asked Municipal Sector Co-Leads Lyle Fitterer and Duane McAllister to share a few thoughts on the current market: 

Municipal bonds performed very well over the year on both an absolute basis and relative to taxable bonds.  Do you expect that performance to continue through 2026?  What will that mean for investors? 

An abundance of supply combined with cash flow volatility associated with Liberation Day led to cheaper municipal valuations in the first half of 2025.  This provided a great opportunity to buy municipals at attractive yields and investors were rewarded in the latter half of 2025 and early 2026.  With a strong credit backdrop as support and attractive tax-adjusted yields, particularly among intermediate- to longer- term maturities, we expect investors will continue to be rewarded with solid returns in 2026.

How will a leadership transition and Fed concerns about inflation affect the markets in 2026?

The Fed’s most direct impact on the municipal market will be felt in the overall shape of the yield curve, helping to maintain a positive, upward slope.  This should provide opportunities for active managers to benefit from roll-down strategies – buying bonds along the steeper portion of the curve and capturing income and potential price appreciation as the bonds age.  For this reason, we are favoring the 15- to- 20-year segment of the yield curve in the Baird intermediate and longer-term municipal funds. 

How do you see the build out of AI energy infrastructure affecting the risks and opportunities in munis?

The build-out of AI infrastructure could impact the municipal market in many ways. Much of the cost of the infrastructure build (e.g. roads, water and sewer lines, additional schools, etc.) will be financed in the municipal market. Bondholders will be repaid from additional taxes generated by these facilities.  This additional supply creates opportunities for investors, but the prudent management of risk will be key. It is important to monitor additional leverage on local government balance sheets and what protections are in place should the pace of growth slow.  

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The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the data quoted.  To obtain the most recent month-end performance data available, please visit bairdfunds.com. 

Investors should consider the investment objectives, risks, charges and expense of each fund carefully before investing. This and other information is found in the prospectus and summary prospectus. For a prospectus or summary prospectus, visit bairdfunds.com. Please read the prospectus or summary prospectus carefully before investing. 

Because the Fund may invest more than 25% of its total assets in municipal obligations issued by entities located in the same state or the interest on which is paid solely from revenues of similar projects, changes in economic, business, or political conditions relating to a particular state or types of projects may have a disproportionate impact on the Fund. In a rising interest rate environment, the value of fixed-income securities generally decline and conversely, in a falling interest rate environment, the value of fixed income securities generally increase. High yield securities may be subject to heightened market, interest rate or credit risk and should not be purchased solely because of the stated yield. Municipal securities may or may not be appropriate for all investors, especially for those in lower tax brackets. All investments carry risk, including loss of principal.  

The LSEG Lipper Fund Awards, granted annually, highlight funds and fund companies that have excelled in delivering consistently strong risk-adjusted performance relative to their peers. The LSEG Lipper Fund Awards are based on the Lipper Leader for Consistent Return rating, which is a risk-adjusted performance measure calculated over 36, 60 and 120 months. The fund with the highest Lipper Leader for Consistent Return (Effective Return) value in each eligible classification wins the LSEG Lipper Fund Award. For more information, see lipperfundawards.com Although LSEG makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by LSEG Lipper.