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Tag Archives: CEF
The recent “taper-tantrum” over the Fed’s potential coming removal of quantitative easing has caused quite some unrest in the bond market. This has caused interest rates, in particular longer term rates (10yrs +) to move substantially higher across the board. Long term munis were no exception and the sell off has left some compelling value in long term munis for long term investors. The chart below takes a long term look (from 1954) at the 20 year muni bond buyer index vs the 20 year US Treasury. Data points are monthly and can be found at the Federal Reserve site. … Continue reading
I am often shocked at how much income investors will stick their neck out for yield. I spend most of my time looking at stocks so I often will note how I think investors are reaching for yield by going after utilities, REITs, etc… But if you really want to see extreme cases of reaching for yield look at some examples in the closed end fund (CEFs) world. Truly mind boggling. I thought I had come across a great example last night but this morning Jason Zweig at the WSJ wrote about a real doozy. Jason’s example is the Cornerstone … Continue reading
In my Time to buy munis? post the other day I think I left out a couple of key elements in my desire to keep the post from becoming too long. As I said in my last paragraph, an even slightly aggressive income investor may want to look at muni closed-end funds as a way to take advantage of the muni sell off and collect some great yield at the same time. Great yield and a chance for capital appreciation – what’s not to like about that? First, a closed-end fund is similar to a mutual fund except that it … Continue reading
I’ve been looking at municipal bonds recently. Whenever I see a large sell off in any asset class accompanied with a lot of media hype the contrarian hairs in the back of my neck tend to perk up. All markets tend to over react more often than not. These over reactions can give patient long term investors great opportunities. So, the question I posed to myself recently was ‘are municipal bonds a good value right now?’ Lets find out. Most investor have heard about the sell off in municipal bonds, driven by the ‘crisis’ in state, local, and municipal governments. … Continue reading