Muni CEFs

[RetireeRobert]

Originally Posted by youbet

Sorry, should have been more specific.......

What's the catch for the CEF to pay about 1% higher yields than the OEF's?

I have money in SNTIX. I picked it because it is rated as one of the lower risk tax free OEF's. But it is only yielding about 4%. Is there a catch go moving to a CEF, such as more risk or ??

Not a catch, but one possible explanation of the higher yield on the CEF's is that they are selling at discounts to their net aset value--close to historic high discounts right now. The discounts widened this summer as the credit markets had their turmoil.

[RetireeRobert]

The December issue of Smart Money column, Streetsmart Strategies, disusses them and opines on CEF's "the babies were thrown out with the bathwater" (page 40, 12/07 Smart Money mag).

[youbet]

Thanks RR.

[Danny]

oh, I see what you mean - I think like Robert said part of the reason is the share prices are below the NAV - of the 4 I own the discount ranges from about 2-9%

NUV NXP NXR NXQ

[youbet]

Originally Posted by Danny

oh, I see what you mean - I think like Robert said part of the reason is the share prices are below the NAV - of the 4 I own the discount ranges from about 2-9%

NUV NXP NXR NXQ

Thanks Danny, I'll check those out. An extra 1% would be meaningful.

Edited: OK, took a quick look. Duration is significantly longer so one catch would be higher volitility with interest rate swings. That might not be a good thing since I'll be selling my tax free funds in a year or so once deferred comp ends and I'm living on portfolio withdrawals (future lower tax bracket). But, more research needed. Thanks for mentioning this.

[RetireeRobert]

Originally Posted by youbet

Thanks Danny, I'll check those out. An extra 1% would be meaningful.

While you're at it, check out all of Nuveen's tax exempt CEF site. They have several flavors. Including several state-specific double tax exempt CEF's if you are in a high tax state. Makes things even juicier if you are in such state they have a CEF for.

Nuveen Investments

[youbet]

Originally Posted by RetireeRobert

While you're at it, check out all of Nuveen's tax exempt CEF site. They have several flavors. Including several state-specific double tax exempt CEF's if you are in a high tax state. Makes things even juicier if you are in such state they have a CEF for.

Nuveen Investments

Thanks again RR