Muni's time to run or hide????

mcmarasco

I would appreciate some thoughts on whether it's a good idea (and is it time) to invest in Muni's. In particular, National Interm. or maybe HY.

I currently have a small percentage in MITFX (BMO Nat. Interm). It is a very good fund by any measure.

I have some money that I need to invest in a conservative manner. Since it will be in a "taxable" account, I am concerned about tax efficiency. That is one reason I am looking at Munis. I considered OSTIX (MU), but it obviously is not meant for a taxable account. It's returns are solid and it is (I feel) relatively conservative, but I will take a nice tax hit!

Any and all suggestions, thoughts and ideas are WELCOME!



Thank you,

Matt

p.s. I also posted this on M*

cman

High yield munis are not for conservative or passive investors. You use it for total returns not just for non-taxable income. With its volatility, you will likely pay capital gains tax on it. For momentum or otherwise active investors, the total returns will make it worthwhile even in tax-advantaged accounts but it is not a serious buy and hold contender for passive or conservative investors. It is not even a good long term hold unless you are in the top taxable bracket to make its pricing (that factors in maximum tax benefits) worthwhile.

The current trend up in HY muni is drawing in a lot of hot money, so expect it to be quite volatile.

Junkster

http://blogs.wellsfargo.com/advantagevoice/2014/01/municipal-investments-2014/

#2 in the link above is a very compelling reason for hiyield munis. Also last year, in spite of all the negatives out of Detroit and Puerto Rico the default rate for both high grade and low grade munis declined for the third consecutive year.

I'm 87% in junk munis and after today will be 100%.

Kaspa

I have increased my position over the last couple of weeks as well. As cman points out, and I think Junkster mentioned before, that this is a momentum play. Let's see how long it lasts.