* There seems to be a few threads and increased interest in Munis recently. I have always found this category more impacted by seasonal trends than most bond oefs. Here is an article that highlights that seasonality:
The Four Seasons of Muni Bond Investing
FEBRUARY 14, 2019 BY SAGE ADVISORY
Timing is everything. For a municipal bond investor, annual seasonal trends can provide great entry and exit points, if executed properly. There are four distinct seasonal periods that occur annually due to structural factors inherent in the municipal bond market. If timed correctly, municipal investors can increase their probability of successfully trading these markets and reap the reward of better returns.
The four seasonal periods that affect the municipal market on an annual basis are January Reinvestment, Tax Season, June/July Redemptions, and the Holiday Season Slowdown.
January Reinvestment
Although not the heaviest period of bond maturity and coupon payments, January 1st does experience an elevated level of cash that needs to be reinvested. In addition, the lingering effects of the Holiday Season Slowdown contribute to a limited amount of new issue supply, as well as diminished levels of secondary supply offered by broker/dealers. This strong technical environment tends to last anywhere from a few weeks to well into February, depending on the direction and magnitude of market flows. For investors who can time liquidity needs, January represents one of the most advantageous times of year to raise funds.
Tax Season – late March through April
From late March until the end of April, the municipal bond market tends to see both a reduction in demand as well as a heightened level of selling to fund tax payments. (Selling tax-exempt municipal bonds to fund personal federal and state tax liabilities remains one of life’s great mysteries.) Regardless, tax season provides an attractive entry point for investors, as limited demand and improving new issue supply tend to push valuations to more attractive levels.
June/July Redemptions
The heaviest period of maturing bonds and coupon payments is during these two months and represents anywhere from 40% to 60% of annual redemptions. Typically, municipal issuers come to market during this time, which offsets the demand pressure from reinvestment. Unfortunately, over the past several years, municipalities have been paying down debt and reducing debt issuance, which has created a net negative supply environment. As long as new issuance remains below the long-term averages, municipal bonds will remain supportive during June and July and provide investors an opportune time to rebalance portfolios (such as reducing credit risk).
Holiday Season – late November through year-end
Thanksgiving should indicate a warning sign to investors regarding optimal liquidity and ample supply. During the week of Thanksgiving, the markets may be open; however, the focus of the market is limited. The last week of November and the first two weeks of December represent the final opportunity for investors to efficiently trade before the market essentially shuts down for the year. Junior traders and reduced staff remain the norm during the last two weeks of the year. Market making and risk taking are severely restricted and a noticeable liquidity premium on bonds is apparent. Fortunately, for those investors looking to put cash to work, the ability to purchase bonds from forced market sells offers the opportunity to add exposure at discounted levels.
7 Best Fixed-Income Funds As Fed Keeps Rates Steady The title says 7 best. What makes them the "best"? The article does not define that.
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1I would look at flexible bond funds where managers can add performance + possibly better risk attributes.
Fund Spy: International-Stock Funds Bounce Back in 2019. DODFX is a volatile fund that can have multi-year streaks of good or bad performance. I was going to say that despite that, it's not a white knuckle fund - with performances in, say, the top 2% or bottom 2% - until I checked. It came in at the 98th percentile in 2015 and the 2nd percentile in 2016.
That sequence goes to show that you have to look at this fund over several years. Its 72nd percentile performance in 2017 and 81st percentile standing in 2018, when combined with its 7th percentile returns in 2019 and also YTD lands it in the top 3/8th (38th percentile) over three years.
Another good year and this fund is going to wind up with a great 3 year record and it will have pulled its 5 year record up quite a bit. If one is willing to hang tight, I don't see a reason to believe that it won't continue to do well, long term. It reopened in part because of nearly a half decade of outflows. So while large, I don't expect size to be a significant issue.
Small Growth Fund For what interest it holds, Wasatch Small-Cap Growth is the only SCG fund that's both a Great Owl (risk-adjusted, entire market cycle) and Honor Roll (total returns, 1,3,5 years) fund; it has the additional endorsement of Morningstar, which recently elevated it to "Gold."
The Wasatch site says the fund is closed "to most new investors through third party intermediaries" which suggests it might not be closed to direct investment.
MFO Premium’s Best Funds of the Decade Akre’s fund works because he sticks to his strategy and no other manager invests like this with major positions in American Tower, Moodys, MasterCard, Visa, etc. The shame of it is that this used to be a mid cap fund, but it’s ballooned to over 12 billion in assets now and mainly holds large cap names.
There’s some interesting funds to investigate there that have flown under the radar for quite a while.
Thanks, Charles
Fund Spy: International-Stock Funds Bounce Back in 2019. PRIDX. (TRP.) 2019: +24.6%. DODFX and PRIDX both had similarly bad years in 2018.
