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U.S. munis log best quarter since 2009, report shows
Note: Although no mutual fund is mentioned, I kept this in Fund Discussions for now because of its relevance to Muni Bond fund investors. I will move it to Off-Topic later on.
We hold our muni positions throughout this year despite all the noise, notably from Whitney et al. For now the intermediate term funds are in the "sweet" spot.
Investors who held fast to their muni bond funds have done just fine. Whitney's comments, which of course the media mostly took as gospel, have proven to be way wrong (no surprise there). While there will always be some defaults, it would appear the number will not likely go above the annual average. Investors need to remember that longer-maturity funds almost always show the most volatility when someone like Whitney makes these out-of-body comments, or when word of a default reaches the news media. I would probably not be buying long-term funds now anyway, since rates are not going any lower over the next 12-24 months. But this story does point out the importance of not making decisions based on the most recent scary story.
Did any of your clients bail out of NEARX? I recall you held the fund in lieu of cash for its stable NAV. I would assume that Sep-Feb extreme volatility created some headwind for this "cash replacement". I would appreciate a frank response.
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