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Muni High Yield Bonds - the place to be - Thanks Junkster
2.84% return for 2015??? Something is amiss. Maybe dividends are not included. Not even familiar with that particular index. Dex's HYD returned 5.06% Many of the open end high yield muni funds returned over 5% also in 2015.
Edit: Still think the junk corporates may surprise in 2016. Albeit I don't trade on what I think, just what I see.
Like greyhounds chasing the mechanical whabbit around the race track, until "hey, where'd the whabbit go?" [it's the end of the race, clueless canine] Fess up-- shameless muni momo traders is whatcha are, uh-huh.
@Dex Given how badly EM currencies have been beaten up (and a little more so on Monday), depreciation risk has gotta be largely eliminated, right? Mix it up here (there are several good funds that approach EM bonds differently), stay exclusively dollar-denominated, and I think EM bonds could be the contrarian play of the year in fixed income. I'm over-weighting.
The muni trade seems to be getting a little hot now. I'm still heavy there, just hope it doesn't reverse too, um, energetically.
Agreed! Yesterday on Barron's Daily all I saw was to beware of 2016 in most markets but not so in munis. An article about Blackrock's love of them and another of David Kotock's. This run is now two years old! Where was everyone in January 2014? I don't like crowded trades but will give my usual mumbo jumbo of enjoy the ride while letting price be your guide and have an exit point.
Junk corporates are holding up surprisingly well in 2016 amid the oil and equity declines. How much is its usual January strength and how much it's something else we shall soon see.
Ended up selling two muni cef's today. They've gone parabolic in the last couple of weeks, up to a 10% total return for 4 months, can't keep that up. Nibbling now at a short duration junk corp/mortgage cef that's picked up some momentum lately.
Ended up selling two muni cef's today. They've gone parabolic in the last couple of weeks, up to a 10% total return for 4 months, can't keep that up. Nibbling now at a short duration junk corp/mortgage cef that's picked up some momentum lately.
Maybe a good move AndyJ Treasuries are suddenly in a world of their own. The munis have not been following along this time around (or at least the past couple days) So much for the divergent strength in junk corporates. Hold about 90% in the junk munis now with the rest in cash but will be alert to any weakness. I sell on price weakness and never strength. A .075% to 1% decline in the open end and I will be 100% in cash. If junk corporates would show me something positive price wise would love to nibble there. I had thought maybe they would come out of the gate better in January and had 15% there at the beginning of the year but was wrong.
Edit: Make that 80% junk munis. Sold 10% before the close. It's been a good 2016 so far and don't want to get caught too heavy when the inevitable decline comes.
Hi Junkster, I had good reason today to regret the buy in the short junk cef, but luckily I hadn't added to it. If it doesn't gain tomorrow, it's gone. The notorious Pimco taxable cef's got blasted; the ones I checked are down by well over 2%, one day after ex-dates.
Almost all the muni cef's I follow have lost momentum now, but preferreds still look okay. I've kept all the oef munis, about 30%; I do like the yield cushion, but like you say, they're losing the race to Treasuries for now. The August low in the S&P is looming large since it's broken below 1900.
Hi Junkster, I had good reason today to regret the buy in the short junk cef, but luckily I hadn't added to it. If it doesn't gain tomorrow, it's gone. The notorious Pimco taxable cef's got blasted; the ones I checked are down by well over 2%, one day after ex-dates.
Almost all the muni cef's I follow have lost momentum now, but preferreds still look okay. I've kept all the oef munis, about 30%; I do like the yield cushion, but like you say, they're losing the race to Treasuries for now. The August low in the S&P is looming large since it's broken below 1900.
Had this discussion before but with 50% B credits or lower and near 50% in Munis PTIAX should be included in a high yield muni discussion.The fund keeps chugging along.
A bit more muted returns compared to the open end junk munis. But agree TSP-Transfer it has been excellent over the years and very trend persistent with low volatility. It may have a place in my portfolio someday were I to spend less time obsessing over the markets. For now, the short term redemption fee is the deal breaker.
PTIAX is my largest bond fund holding. The strategy is barbelling IG munis against below-IG non-agency mortgages: good yield, not tax-exempt, with a slight tendency toward rate sensitivity most of the time. A few months ago they lowered the muni percentage, so recently it's been about 40-60 muni-mortgage.
Dex, hy munis (HYD, PYMDX, NHMAX, etc.) are up a little less than 1% ytd, and long T's are up over 3%. That's what we were yakking about. (I own and am holding the two oef's inside those parentheses one sentence up.)
I have yet to find (and I have looked pretty hard) any credit breakdown of the muni holdings of PTIAX. Based on day-to-day NAV action, I have always suspected that the fund carries a good chunk of junk muni bonds. I wouldn't assume IG for this part of its asset allocation.
Good point; you're right that it's an assumption. I'd forgotten that it was one that I made early on, but it's made so much sense over the ~ two years I've owned it that I've obviously started treating it as fact.
The mortgages are non-agency, which implies lower ratings, the % of muni holdings has pretty much tracked the % of IG (see now, for example, 40-ish% munis, 40-ish% IG), and the rate sensitivity led me to assume the same. Doesn't mean it's exactly 1:1, but overall, I've perceived that as the pattern that reconciles the NAV behavior and yield of the fund.
Just mho - AJ
P.S. I'll try to remember to call 'em tomorrow and see what they say. I've talked to an analyst or manager there twice but can't recall if the IG-junk breakout was a topic.
AndyJ do you ever venture into the preferred? I normally stick with the open end junk munis or junk corporates whichever is trending. But am buying some NPSRX today. CPRRX is the master of that domain but I prefer the funds where the dividends accumulate daily and posted end of month like NPSRX. Just a quirk I guess.
P.S. I'll try to remember to call 'em tomorrow and see what they say. I've talked to an analyst or manager there twice but can't recall if the IG-junk breakout was a topic.
Did so, nobody was available from the MF team, so I was asked to e-mail a detailed question. When I hear back from that, I'll post the answer.
AndyJ do you ever venture into the preferred? I normally stick with the open end junk munis or junk corporates whichever is trending. But am buying some NPSRX today. CPRRX is the master of that domain but I prefer the funds where the dividends accumulate daily and posted end of month like NPSRX. Just a quirk I guess.
Yes, but only dipped the first toe in later in 2014. I started with PPSAX, picked for its mild personality; since mid-2015, I've had positions in FPF and JPI (cef's) and FPE (an etf), now just FPF and JPI.
Have to say I still don't have a good handle on analyzing a portfolio or understanding the market behavior very well - but they've got good yields, and so far in my experience they haven't been anywhere near as dangerous to my financial health as hy corporates.
Right now I think preferreds and munis are the asset classes I like best in cef's; haven't seen either fall off a cliff, for example like the Pimco taxable FI cef's did yesterday.
Comments
( copied from my earlier "year end returns' post )
@Junkster
S&P Municipal Bond High Yield Index 1 YR
LAUNCH DATE: DEC 31, 2000
246.90 2.84 %▲
S&P Municipal Bond High Yield Index 5 YR
LAUNCH DATE: DEC 31, 2000
246.90 8.06 %▲
http://us.spindices.com/indices/fixed-income/sp-municipal-bond-high-yield-index
https://www.spdrs.com/product/fund.seam?ticker=HYMB
C E F Invesco Municipal Income Opp Trust (NYSE:OIA
https://www.google.com/finance?q=NYSE:OIA&ei=tYSKVuLHMZbVjAHQvouoAw
! Yr and 5 r returns and two options for investment in High Yield Municipals and your post was.....Informative ?????
Edit: Still think the junk corporates may surprise in 2016. Albeit I don't trade on what I think, just what I see.
Just jumped into GIM. I'm looking for a rebound after a tough year.
@Junkster Yeah, corp junk might be alright and present a good opportunity soon. I mean, look at those spreads--- almost as high as 2008! Kind of absurd. Isn't that like pricing in a default rate of 8-9%, already, even though it still remains less than 2%.? Looks like an irrational selling overshot to me, usually a good time to "shift the gaze" and start formulating a plan of action.
http://www.institutionalinvestor.com/article/3518122/asset-management-fixed-income/what-it-feels-like-to-be-a-junk-bond-contrarian.html#/.VovgBTb70XM
@Dex Given how badly EM currencies have been beaten up (and a little more so on Monday), depreciation risk has gotta be largely eliminated, right? Mix it up here (there are several good funds that approach EM bonds differently), stay exclusively dollar-denominated, and I think EM bonds could be the contrarian play of the year in fixed income. I'm over-weighting.
Where are people going to put there money?
Stocks?
HY corp bonds?
US Gov't bonds that pay little?
Commodities?
HY munis, when you look at their charts have room to run.
Edit: Make that 80% junk munis. Sold 10% before the close. It's been a good 2016 so far and don't want to get caught too heavy when the inevitable decline comes.
Almost all the muni cef's I follow have lost momentum now, but preferreds still look okay. I've kept all the oef munis, about 30%; I do like the yield cushion, but like you say, they're losing the race to Treasuries for now. The August low in the S&P is looming large since it's broken below 1900.
http://www.marketwatch.com/investing/fund/HYD
http://www.marketwatch.com/investing/fund/NHMAX
https://www.google.com/finance?q=MUTF:PTIAX&ei=MNKWVrneEpeSefmYudgO
http://www.ptiafunds.com/images/website/documents/fund-documents/ptiax_factsheet.pdf
Dex, hy munis (HYD, PYMDX, NHMAX, etc.) are up a little less than 1% ytd, and long T's are up over 3%. That's what we were yakking about. (I own and am holding the two oef's inside those parentheses one sentence up.)
The mortgages are non-agency, which implies lower ratings, the % of muni holdings has pretty much tracked the % of IG (see now, for example, 40-ish% munis, 40-ish% IG), and the rate sensitivity led me to assume the same. Doesn't mean it's exactly 1:1, but overall, I've perceived that as the pattern that reconciles the NAV behavior and yield of the fund.
Just mho - AJ
P.S. I'll try to remember to call 'em tomorrow and see what they say. I've talked to an analyst or manager there twice but can't recall if the IG-junk breakout was a topic.
Have to say I still don't have a good handle on analyzing a portfolio or understanding the market behavior very well - but they've got good yields, and so far in my experience they haven't been anywhere near as dangerous to my financial health as hy corporates.
Right now I think preferreds and munis are the asset classes I like best in cef's; haven't seen either fall off a cliff, for example like the Pimco taxable FI cef's did yesterday.
http://www.seeitmarket.com/time-to-extract-value-from-municipal-bonds-backed-cefs-investments-15185/