Franklin Templeton Sees Costly Legal Fight Over Puerto Rico Bonds

Comments

• msf

  July 2015

  Oppenheimer is the largest holder of PR bonds (notably through its Oppenheimer Rochester funds), and it has vowed not to give an inch:
  http://www.businessinsider.com/r-major-puerto-rico-investor-warns-it-stands-ready-to-defend-bonds-2015-6
  
  These funds have a history of juicing their returns with low grade bonds outside of what their prospectuses allow.
  http://www.law360.com/articles/468793/oppenheimer-reaches-90m-deal-in-municipal-bond-case
  
  So it's not surprising to find that Oppenheimer is the largest holder of PR bonds, or that nearly all the funds with the highest percentage of PR bonds are from Oppenheimer (see the CNBC link in the thread:
  http://www.mutualfundobserver.com/discuss/discussion/22097/is-your-bond-fund-invested-in-puerto-rico-video-text-presentation
  
  The top fund in terms of percentage PR bonds is F-T's Double Tax Free Income Fund, but that fund practically screams Puerto Rico by design - it holds funds that are tax free in every state, meaning US territory bonds. Most of that market is Puerto Rican bonds. The Oppenheimer funds are different.
  
  
  
• Sven

  July 2015

  Due to their conservative nature Vanguard has much lower allocation to PR bonds. The High Yield Tax-free bond fund has the highest exposure fund at 1.8%.
• Old_Joe

  July 2015

  Hard to squeeze water from cement cinderblocks. Or something...
• msf

  July 2015

  Sven said:

  Due to their conservative nature Vanguard has much lower allocation to PR bonds. The High Yield Tax-free bond fund has the highest exposure fund at 1.8%.

  Undoubtedly true, but because Vanguard is so large, the complex as a whole was #6 in PR bonds as of a year ago. (Still, an order of magnitude less than Oppenheimer.)
  
  See table in this Bloomberg article from Feb 2014.