investing.com article about Muni funds

[upupandaway]

I will admit I don't know a great deal about Municipal bond funds. Obviously this article has a certain view point but I'm curious if anyone actively uses them and are they simply a part of your strategy or do you lean on them heavily for the tax advantages? The first comment on this article is a contrarian viewpoint at least to how they were calculating the counter scenario profitability of owning Vanguard S&P 500 (NYSE:VOO). The person leaving the comment had some valid points regarding how you could go about managing taxes in the aforementioned S&P 500 fund. Also if anyone has a resource that they like on the topic I'm always interested in expanding my knowledge. Thanks

https://www.investing.com/analysis/50000-in-dividend-income-0-in-tax-heres-how-200484172

 

[MichaelB]

The article promotes a closed end muni fund (NMZ) that uses leverage, but doesn’t mention either as a risk factor. This type of investment is not a good option for anyone not understanding the risk of leverage or a CEF.

 

[youbet]

From the article:

Disclosure: Brett Owens and Michael Foster are contrarian income investors who look for undervalued stocks/funds across the U.S. markets. Click here to learn how to profit from their strategies in the latest report, "7 Great Dividend Growth Stocks for a Secure Retirement."

So, caveat emptor I guess.........

 

[Montecfo]

I own Nuveen Muni Value (NUV)and have for years. It has been very solid. I added to it in the past year. It is a CEF, but no leverage.

It is not a "cornerstone", just an ingredient. Has done well over time with far less volatility than expected.

I like that it is a fund and a CEF is great for bonds, since they are not hit with massive redemptions which exacerbate market inflection. And diversified and active management, which I think you want for bonds.

 

[COcheesehead]

Muni's yes. Funds, no.

 

[Montecfo]

CEFs yes.

 

[jazz4cash]

I have single state muni fund in a brokerage account for my high SALT location. I’m buying into into it every month. Pays about 2.5% and I benchmark it to a MMF.

 

[DrRoy]

I have liked individual munis in the past, but for a while I have found that taxable bonds have a better after tax yield.

 

[jazz4cash]

I have liked individual munis in the past, but for a while I have found that taxable bonds have a better after tax yield.

I agree. I have a single individual muni and would love to buy more but nothing remotely attractive compared to the intermediate term fund I have. It takes a lot of cash to be diversified with individual bonds.

 

[phil1ben]

I have roughly 70 individual muni bonds across different states, maturities and credit quality. I bought many of them 4-6 years ago and together they have a weighted tax free yield of 4.02%. I do my own research and buy them through the Schwab platform. I always hold until maturity or until call. Obviously, the problem I have been having is that upon maturity or call I cannot replace the bonds with anything remotely approaching the above yield.

 

[COcheesehead]

I agree. I have a single individual muni and would love to buy more but nothing remotely attractive compared to the intermediate term fund I have. It takes a lot of cash to be diversified with individual bonds.

I have been trying to stay true to my ladder. I bought a number of issues when rates were higher and I am glad I did. My yield is 4.53% and much of that is double tax free.
I had about 120 individual issues and between maturing bonds and calls, that is down to about 80 now.
I still find a needle in the haystack occasionally with individual issues.

 

[jazz4cash]

70 issues....120 issues. I can’t fathom having so many but it must feel awesome getting those yields. Is that current yield or yield on cost?

 

[Big_Hitter]

Muni's yes. Funds, no.

+1

 

[COcheesehead]

70 issues....120 issues. I can’t fathom having so many but it must feel awesome getting those yields. Is that current yield or yield on cost?

Fido has some excellent bond management tools. I more or less manage off of alerts only. So though it sounds like a lot, it’s reading just a few emails a week.
The yield is calculated by Fido and they call it average estimated yield. I need to look at their methodology.