Summary

• Invesco Short Term Municipal Fund Class A shares at net asset value (NAV) underperformed its style-specific index, the S&P Municipal Bond Short Index, during the first quarter of 2026.
• New municipal issuance reached $135 billion, 11% higher than the first quarter of 2025, likely driven by significant US infrastructure needs, higher supply costs and reduced federal spending.
• Municipal mutual funds and exchange-traded funds (ETFs) had strong net inflows over the quarter, totaling approximately $26 billion.
• The Invesco Municipal Bond team is using a barbell strategy with variable rate demand notes (VRDNs) on one side and short call premium coupon bonds on the other.
• While there has been a slowdown in credit rating upgrades, they still exceeded downgrades in the first quarter, highlighting Invesco's view of strong underlying fundamentals in the municipal market.

Q1 2026 Key takeaways

1 Fund performance

Invesco Short Term Municipal Fund Class A shares at net asset value (NAV) underperformed its style-specific index, the S&P Municipal Bond Short Index.

2 Seeking attractive opportunities through