Muni Fundamentals Strongest In Five Years

If you’re looking for a vote of confidence in the muni bond market amid its seemingly never-ending malaise, BlackRock offers one this week. Peter Hayes, head of BlackRock’s muni group, and James Schwartz, head of muni credit research there, acknowledge that August was the fourth straight month of losses for munis, and investors continued to pull money from muni funds. But as we all ponder when this is going to end, they say munis are at their cheapest in two years and market fundamentals are the best they’ve been in five, so it might be time to start buying again. From BlackRock:

While the overall environment remains challenging, the recent correction has restored value in the market and placed yields at levels not obtainable since early 2011. High-quality municipal bonds offer tax-equivalent yields in the area of 8%, a compelling proposition for investors able to stomach the near-term volatility. Beyond the headline noise, we find the fundamentals in the broad market to be stronger than they have been in five years, and believe the steepness of the yield curve and new rate regime present attractive opportunity for investors focused on income and capital preservation.

Source:  Barrons

D2 Capital Management's Tax Free Income Portfolio consists of a diversified mix of highly rated municipal bond mutual funds.  The Portfolio currently has a 3.27% SEC 30 day yield and a 3.41% trailing 12 month yield which results in a 4.73% tax equivalent yield for an investor in the 28% Federal Income Tax bracket (as of 12 September 2013).

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.