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Closed end muni mutual funds
Old 12-08-2013, 10:45 AM   #1
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Closed end muni mutual funds

I looked at and bought two closed end Muni equity stocks the other day they looked ridiculously cheap. Did I miss something? EIM and NQM. Below book, making more money than they are paying out and a dividend yield of 7+%. Tax free. Eaton Vance and Nuveen. Two firms with a good track record.
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Old 12-08-2013, 10:52 AM   #2
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Beware leverage in the funds.
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Old 12-08-2013, 11:35 AM   #3
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Just look at the past year rollercoaster and see if you would have been willing to subject yourself to that.

They probably are a good deal. Folks I know who like CEFs are taking advantage of the firesale on muni CEFS right now. Just examine point number 1 above first. That's why I never hold any CEFs.
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Old 12-08-2013, 12:02 PM   #4
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Yes aware of the leverage. I don't have any anywhere else and I don't need the money tomorrow. We'll see. It's my first transaction in muni space.
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Old 12-08-2013, 02:13 PM   #5
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Beware leverage in the funds.
+1 Leverage here is NOT your friend if interest rates rise sharply.
Also- some believe the relative safety of many muni's to be overstated by the bond rating agencies considering the high debt load of many local gov'ts. The legal precedents set by the Detroit bankruptcy may also affect the muni market.
I have invested in certain Nuveen muni CEF's in past & continue to hold a few shares as I think the selling has been overdone, recent share price declines have priced in some rise in long interest rates, & the current discounts to NAV provide some cushion against further declines. However- IMHO these still should be viewed as somewhat speculative.
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Old 12-09-2013, 02:19 AM   #6
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Interesting. NQM has been around over 20 years and has only had above a 10% discount to NAV a couple of times. Of course, interest rates have not had a sustained rise for over 30 years. Good luck.
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Old 12-17-2013, 02:40 PM   #7
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The selling has abated in closed end muni funds. Let's see if it resumes after the fed announcement tomorrow at 2pm.
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Old 12-17-2013, 06:32 PM   #8
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It is silly season for CEF now.

A good report by Morningstar here a couple of the funds mentioned look interesting.
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Old 12-19-2013, 05:01 PM   #9
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First time I picked a bottom....
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Old 12-19-2013, 05:20 PM   #10
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First time I picked a bottom....
I am standing by my decision to stay away from CEF / bonds all year.

I am in growth mode though and bonds are directly related to interest rates. Interest rates won't rise too much here in the coming years. The housing inventory is pretty much "holding steady" with small pockets of wins based on what I have been reading.
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Old 12-20-2013, 03:56 PM   #11
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Closed end funds usually if not always trade at a discount. You'll sell at a discount too when you want out assuming you can find someone willing to buy. I'd never buy a closed end fund.
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