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High Yield (Junk) Munis

JunksterJunkster
edited January 2014 in Fund Discussions
Will be moving around 12% out of HFRZX to NHMRX. Will have this on a short leash but also will increase if the position trends in my direction. The first many days of 2014 hasn't told me much (equity or bonds) other than junk bond munis have shined. I don't have the link but just saw where the default rate was lower in 2013 (just as 2012 was lower than 2011) for not just high grade munis but also junk munis. Seems the decline in munis last year in light of the lower defaults was an overreaction to Detroit and Puerto Rico.

Comments

  • beebee
    edited January 2014
    I agree with your muni allocation. I also am hoping High Yield Corporates will also fair well this year. Does it worry you that 46% of NHMRX's bonds are not rated?


  • cman
    Looks like good timing on technicals.
  • SlowLane
    Just cross your fingers that Meredith Whitney keeps quiet.:)
  • Mona
    Junkster,

    M* indicates the duration on NHMRX is a bit over 12 years. If the 10 year Treasury continues to climb as expected, how do you see it affecting the NAV?

    Thanks,

    Mona
  • JunksterJunkster
    edited January 2014
    Reply to @Mona: Mona I would not recommend this for others here. As you well know, this is primarily a momentum position based on how fast junk munis have come out of the gate in 2014. My HFRZX is still performing well so don't intend to go overboard with junk munis unless...... As for valuation and the Treasuries, I just think that based on their yield (compared to Treasuries) huge 2013 fund outflows, and continuing low default rate, that junk munis are compelling. Now they have the momentum in their favor. On the other hand, munis are seasonally weak from February into early April so that could be a headwind. Plus, I never get married to a fund or position and always have a tight mental stop on where to exit.
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