Your opinion on Muni CEFs

[steadyeddy]

I hold half-a-dozen Muni CEFs and have been holding for the last couple of years; obviously they are providing monthly income but paper loss on the market price is in the 20% range. 

Muni CEFs are about 5% of my portfolio.

Look through YOUR CRYSTAL BALL, and tell me (just as an opinion) if you were in my position would you HOLD/ADD/FOLD these positions?

All disclaimers such as "this is not investment advice" apply and I am eager to hear what the smart people here think about this situation.

Eddy

[FD1000]

I don't see a good reason to hold Muni CEFs.
A LT chart shows that NHMAX made more money in 10 years, see (schrts.co/EwtydSBe). YTD+1 years show that NHMAX is still better.
And the best idea, at least for me, is to trade them. OEFs are slower and easier to trade. CEFs are also good tradable choices, after all, you can see premiums/others which help you with trading...in theory.

[steelpony10]

steadyeddy ,

       It’s only 5% and you’re holding those for income? You don’t hold bonds for cap gains because yield varies affecting values. You hold equities for cap gains where about 6 things affect values up and down and they’re unknown day to day. Like that idea?

        Make sure you add in all the income you received since your initial investments to see how much you’re really “down”. Why sell and make a value drop a real loss? What would you do to replace the income? Have a for sure better idea you like better?

         I vote for adding more income if you want to, they’re still on sale, or hold. 

[steelpony10]

steadyeddy ,

   I like these polls especially if posters give opinions based on facts not speculation about the future.

[steadyeddy]

Jun 6, 2023 12:06:34 GMT FD1000 said:

I don't see a good reason to hold Muni CEFs.
A LT chart shows that NHMAX made more money in 10 years, see (schrts.co/EwtydSBe). YTD+1 years show that NHMAX is still better.
And the best idea, at least for me, is to trade them. OEFs are slower and easier to trade. CEFs are also good tradable choices, after all, you can see premiums/others which help you with trading...in theory.

FD1000, I do not see a good reason to hold muni CEFs either now that my arse is hurting 🤣

But, that is not what this thread is discussing. If you care to respond, simply vote in the poll and perhaps provide a reasoning for your choice just like steelpony10 did.

Thank you.

[steadyeddy]

Jun 6, 2023 12:48:26 GMT steelpony10 said:

steadyeddy ,

       It’s only 5% and you’re holding those for income? You don’t hold bonds for cap gains because yield varies affecting values. You hold equities for cap gains where about 6 things affect values up and down and they’re unknown day to day. Like that idea?

        Make sure you add in all the income you received since your initial investments to see how much you’re really “down”. Why sell and make a value drop a real loss? What would you do to replace the income? Have a for sure better idea you like better?

         I vote for adding more income if you want to, they’re still on sale, or hold. 

steelpony10 , as always you make a good case. I do not have a "for sure better idea" to deploy the money if I sell them.

[gman57]

Muni's tend to be longer term.  They provide decent income and if you think interest rates are stable or will go down in the not too distant future which will cause their NAV to increase more than ST/IT bonds since they are longer term it's time to own them IMHO.

[steadyeddy]

Jun 6, 2023 23:21:26 GMT gman57 said:

Muni's tend to be longer term.  They provide decent income and if you feel interest rates are stable or will go down in the not too distant future which will cause their NAV to increase more than ST/IT bonds since they are longer term it's time to own them IMHO.

gman57, thanks for sharing this perspective.

[dougj1]

When Capecod was posting in a format available to me, he would always downplay holding muni CEF's as they didn't provide better actual income, even though they were somewhat tax exempt as taxable CEF's.  You would need to do the math for your situation, but for me it came out taxable CEF's provided more income.  Not sure if I  would sell them, but wouldn't add to them. 

[steadyeddy]

So far, 4 voted for ADD/HOLD; and 4 voted for FOLD. Kind of split just like everything else in life these days.

I will keep tracking and see if more folks would express their opinion before the poll closes on June 13th.

[Chahta]

My fat finger hit the fold but meant to hold.

[steadyeddy]

Jun 10, 2023 10:57:27 GMT Chahta said:

My fat finger hit the fold but meant to hold.

Chahta, your vote tipped the results in favor of add/hold. Thanks.  I am staying put.

The poll is still open till June 13th.

[Chahta]

I do not think any bond funds are worth selling now. If the cost basis is favorable, they will pay off at some point. Depending on need for income they may be worth adding at this low point. I am considering doing just that. What funds do you hold?

[chang]

Jun 10, 2023 12:39:08 GMT Chahta said:

I do not think any bond funds are worth selling now. If the cost basis is favorable, they will pay off at some point. Depending on need for income they may be worth adding at this low point. I am considering doing just that. What funds do you hold?

I have a 6M T-bill maturing in a couple of weeks. Pretty sizable amount. I need to decide whether to roll it over, or put it into an ETF. Needs to be a *safe* investment (my only other FI investment - PIMIX - does not qualify as safe).

Happy to consider taxable or municipal bonds, or just a MM, but if it doesn’t yield more than another 6M T-bill then I won’t see the attraction.

[Fearchar]

I'm in a similar boat with a ton of 3 M T-Bills coming up over the next few months.

Since June 1st, Treasury rates longer than 1 year have been rising (prices falling).



Shorter term rates (1mo - 6mo) have been falling.
The yield curve remains inverted, but at least it's rotating (slowly) towards normalcy.
The pivot point is between 6mo to 1 year.

On Monday, Blackrock was advising that up to 2 years should be safe.
However, the data shows the pivot is shorter than that (at least over the last 10 days).

[Fearchar]

Sorry I was off topic just now with a post on Treasury's.

My impression of Municipals is that rates are headed higher.
The reason is that Muni's are swimming in Covid cash.
There may be some claw backs, but longer term I suspect the FEDs tightening is going to hit Munis.

So, I'd keep duration super short or just avoid for now.
I'd be nice if I could find a chart for Muni's similar to Treasuries.

[Chahta]

chang , I have mentioned CBLDX and RSIIX with David Sherman as manager. The yield, SEC yield are better and the YTD TR are on track to beat the T-bill. But honestly, with any principal risk at all how do you beat 5.4%?

[Chahta]

Now, the opinion of muni CEFs. I am curious why? HY muni funds like NHMAX are kicking off well over 5%. Much better than muni CEFs.

[chang]

Jun 10, 2023 13:47:23 GMT Chahta said:

chang , I have mention CBLDX and RSIIX with David Sherman as manager. The yield, SEC yield are better and the YTD TR are on track to beat the T-bill. But honestly, with any principal risk at all how do you beat 5.4%?

Yes I know you have, and it's appreciated. I hid out in RPHIX during 2022, one of the less stupid things I've done. But I consider all his funds overpriced, and my inclination is to use them when serious defense is needed. Now that it seems (?) that the worst of the bond carnage is over, I would prefer to look for more competitive options.

And yes, T-bills and MMs seem like a pretty good, safe bet. There are some cheap ETFs that own mostly T-bills; I ought to check into those. And I'm not ruling out munis, but S/T muni funds traditionally have very paltry yields (VWSUX now 3.13% SEC yield).

Edit: BSV yield 4.50%, VMMRX/VMRXX yield 5.05%. Why fool around with ST bond funds?

[Chahta]

I bought at the end of 2022 when they went ex-dividend, so I believe I bought cheap. They are doing better than the other taxable funds I own. OSTIX, TSIIX, DODIX. They are all qualty and I bought for long term. I am tired of chasing, changing, second guessing. I bought them all last year maybe a tad early. I am reinvesting to build low-cost income generators.

[retiredat48]

Folks, just be prepared to ask yourself: "What are you going to do when Sacramento
calif, and NY City, announce on a Friday that they are suspending muny bond payments?" and ALL Muny prices tumbling. IMO these are not without risks. Remember Silicon Valley Bank surprise?  Just like commercial real estate, towns/cities will be rolling over maturing Muny's into much higher rates---can they survive?


R48

[Chahta]

Valid point but I doubt the Feds will let that happen. Not quite like Stockton going BK years ago. The entire investing world is fraught with dangers and 'what-ifs'. Better to be diversified (that awful word) I guess. As far as CA goes, I doubt Newsom would ruin his chances of running. That being said, I would never hold CA or NY muni funds. NEVER!

Should I get out of anything that owns Target or Anheuser Bush?  Already SC funds with banks are being recommended again. See the Barron's post by YBB.

[retiredat48]

Jun 11, 2023 13:16:51 GMT Chahta said:

Valid point but I doubt the Feds will let that happen. Not quite like Stockton going BK years ago. The entire investing world is fraught with dangers and 'what-ifs'. Better to be diversified (that awful word) I guess. As far as CA goes, I doubt Newsom would ruin his chances of running. That being said, I would never hold CA or NY muni funds. NEVER!

Should I get out of anything that owns Target or Anheuser Bush?  Already SC funds with banks are being recommended again. See the Barron's post by YBB.

It's not whether the fed eventually intervenes or not.  It is the immediate headline risk across the entire muny space, one faces.  So all good boy scouts should be prepared...as in: what will you do on that announcement day?  And remember President Ford's message on defaults: to hell with NY City.

Disclosure...I was a boy scout to age 13; then became a scouter of girls!

R48

[bigseal]

I’ve basically never owned bonds my entire 50+ years of investing, except for a very minimal 
 amount of short-term treasuries.  Always been more comfortable owning equities…..even as a retiree.

[steadyeddy]

This poll is now closed, and the final count: ADD/HOLD 5 (including Chahta's fat-fingered response) and FOLD 5.

I am staying put with my holdings.

Disclaimer: None of the respondents is accountable/liable for the decision I have taken personally in my investments.

This poll is purely for educational purposes.