High yield MUNI help

mcmarasco

With the impending FED rate cut(s), I have been dipping my toe into the bond arena.

I'm currently interested in the MUNI area to augment the intermediate-term muni MF I already hold. I'm finding it somewhat difficult to narrow down the way I would like to. I'm looking for a solid fund with very good risk/reward, solid returns and reasonable SD (under 10) and a more "conservative" downside capture ratio with a good upside ratio (if this makes sense).

**I am open to MF or ETF (prefer active) and to this point have identified three candidates.

FEHAX (First Eagle High Yield Municipal): might be a bit performance chasing, but doing extremely well with the new PM of 6 or 7 months. It's metrics are impressive, but again new PM with a very short track record with this fund

ABHFX (American High-Income Municipal): very good metrics and returns and track record

CGHM (Capital Group Municipal High-Income): Brand NEW ETF, about three months new. From what I can tell, It appears to be a cousin of ABHFX. I believe the share they same managers, objectives and some metrics that I can find.

Any thoughts, ideas, other suggestions are very welcome! Thx. Matt

rsorden

FEHAX manager came from Nuveen...one of his charges there was NHMAX, which was a pretty decent fund. Same with NVHAX, he short duration HY muni fund he ran at Nuveen.

mcmarasco

rsorden, thanks for your input! Any thoughts on why he moved to First Eagle? NHMAX was very volatile per high SD (12+) under Miller with mixed results; very good long-term, not so much shorter-term.

NVHAX doesn't seem overly impressive to me either. SD was below category, returns a bit mixed, but the up/down ratio's were not bad.

I wonder if FEHAX is going to become another NHMAX? What's your guess?

What's your overall feeling about Mr. Miller? I believe you buy the PM and the objective, so it's important to me that the PM is stable, consistent and reliable. Thx!

sma3

I had a similar question recently having started a position in MLN last fall. MLN is riskier than I like although even "conservative" higher yield munis lost 15% or more in 2022. MLN has bounced back so I kept it not wanting more capital gains.

After looking at a number of funds I finally settled on PRFHX and PHMIX. They have higher APRs than the peer group, with a St Dev and DD similar to others and the usual "Lower risk high yield fund everyone mentions" VWAHX)

mcmarasco

Sma3, thank you for your input. I did review the two MFs you mentioned. They are good candidates but I think ABHFX is slightly a better fit and still unclear about FEHAX.

I may go back and reevaluate those funds. Thx!

yogibearbull

Nuveen is a very big player in munis, and John Miller was the Head of that. He was known to throw his weight around, and no wonder, great deals came to him first - or he threatened to blacklist the issuers. But he was feared and there were lawsuits and one of them was settled. John Miller coincidently decided to retire after 30 years at Nuveen. My take away is that when someone is hurt too much, they have nothing to lose in striking back with legal tools. So, fear works best when used just to get positive cooperation and results.
https://www.planadviser.com/nuveen-muni-head-steps-heels-legal-settlement/
https://www.investmentnews.com/practice-management/nuveen-gets-new-muni-bond-leader-amid-lawsuit-settlement/236209

I am sure John Miller is good, but can he achieve the same things that he could at Nuveen? IMO, its the combo of individual talent & firm's resources.

As 2 examples, Jeff Gundlach did good on his own, but Bill Gross didn't (at JHG).

mcmarasco

Ybb, great insight, thoughts and points! I’m not a trader so that brings into question whether FEHAX can be a long-term (hold) winner under Miller at First Eagle.
Thx. Matt