Safety Produces Slim Returns

Municipal bonds backed by revenue from essential services such as electricity and water are in their biggest slump since 2009 as the Fed’s stimulus policies discourage investors from buying safer assets.

Electric-utility debt has gained 4.1 percent this year, and water and sewer bonds have returned 4.7 percent, Barclays Plc indexes show. That makes them the two worst-performing types of revenue securities, and both trailed the $3.7 trillion muni market through August by the most in at least three years.

Fed Chairman Ben S. Bernanke’s policy of keeping the central bank’s key lending rate near zero has helped push bond yields to near-record lows.

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