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Muni Fund Outflows have been large and swift. They are approaching 2013 levels but in less than half the time. Shown is the chart link from Citi & Lipper posted on Twitter. Of course, the implications of heavy muni industry outflows for muni CEFs are their widening discounts. https://twitter.com/GunjanJS/status/1528782964460605443/photo/1
Using VWITX as a benchmark, NAV is down 10.5% from H2 2021. Yield is 2.25% (per Marketwatch) and NAV is lower than at any time in the past decade. -- a few pennies below the covid crash.
Another benchmark, MUB is down 10.1% from its H2-2021 with a yield of 1.92%.
With an acknowledgement that the space could get a technical bounce, I find the yields woefully unattractive, given the inflation environment, and other alternatives for capital deployment. What kind of tax-free yield might get my attention? Maybe something like 4.5%.
I don't love the muni space, but I need the muni space. So do many people. Placing most bets with VWALX and MMIN. Bought the big dips in XMPT, that has worked out well for me in the past.
It is possible the muni outflows have stopped and reversed? I heard a report on the radio Wall Street money managers are looking past inflation at a coming recession. They believe depressed munis are the place to be for a recession.
For the past six months I've watched relentless declines in almost all muni funds I follow, and could not understand what was driving them down more than can be explained by concerns over rising interest rates. Flows into CEFs (to take advantage of the discounted market price) would make sense, but CEF muni prices were also falling. I'm still puzzled, but muni funds and CEFs now seem to be climbing more steadily than other bond categories. But why?
Comments
Using VWITX as a benchmark, NAV is down 10.5% from H2 2021. Yield is 2.25% (per Marketwatch) and NAV is lower than at any time in the past decade. -- a few pennies below the covid crash.
Another benchmark, MUB is down 10.1% from its H2-2021 with a yield of 1.92%.
With an acknowledgement that the space could get a technical bounce, I find the yields woefully unattractive, given the inflation environment, and other alternatives for capital deployment. What kind of tax-free yield might get my attention? Maybe something like 4.5%.
http://portfolios.morningstar.com/fund/holdings?t=XMPT®ion=usa&culture=en-US
https://twitter.com/YBB_Finance/status/1530175523921481729
https://stockcharts.com/h-perf/ui?s=PDI&compare=PDO,PAXS,NVG,NMZ&id=p90716308532