Dreyfus/BNY Mellon posted a brief entitled, "Higher Rates and Tax Reform: Now is the Time for Short-Term Tax-Exempt Investing." It says, "The market environment clearly has changed: the era of ultra-low yields on liquid assets is over. Higher short-term interest rates, stimulative fiscal policies and business-friendly changes to the tax code have made tax-exempt money market funds more attractive for individual and institutional investors seeking to maximize returns while managing tax liabilities and maintaining liquidity." The piece explains, "Investors are focusing more intently on tax-exempt investments -- including municipal money market funds -- now that short-term interest rates are climbing. Investors who once paid little in taxes on the meager interest earned from taxable money market funds are seeing greater tax liabilities as yields increase, even at lower corporate tax rates. For those concerned about renewed tax burdens, now could be an opportune time to reallocate their assets into tax-exempt money market funds.... The need for tax-exempt income may be particularly strong in high-tax states, such as New York, New Jersey, Connecticut and California, where tax reform legislation curtailed the deductibility of state and local taxes. It makes sense that these taxpayers will seek alternative ways to manage their tax liabilities, including shifting income-producing assets to state-specific municipal bond and municipal money market funds. Institutional investors will also strive to maximize their after-tax yields. Moreover, tax-exempt money market funds offer important diversification benefits for companies' liquid assets. Highly liquid funds with short-weighted average maturities, strong credit characteristics and attractive after-tax yields should remain compelling alternatives for institutional investors." Finally, Dreyfus adds, "Recent tax-exempt yield increases may be just the beginning of a longer-term trend. VRDN issuance volumes appear poised to increase as U.S. commercial banks convert some of their direct municipal loans to more cost-effective structures, including VRDNs.... In today's new market environment, it has become increasingly clear that tax-exempt money market funds have an important role to play in the management of liquid assets. Dreyfus is a longstanding leader in the management of money market funds, and can help you achieve highly competitive returns while managing your tax liabilities, maintaining liquidity, adding diversification and preserving capital."

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