Muni Market Update

Muni Market Update | March 2019

Muni Market Update | March 2019

Executive Summary:

  • Discounts are much tighter than 3 months ago so we've gone from looking for shorter-term trading opportunities to longer-term "holds"

  • Fundamental research is again key as we hunt for those funds that are likely to sustain their distribution for the rest of the year.  

  • We want to avoid distributions cuts as the rest of this year appears to be a coupon +- return environment.

Muni Market Update | February 2019

Muni Market Update | February 2019

Summary

  • Munis have done well so far this year despite the rally in equities with the iShares Muni ETF up 0.82% YTD.

  • However, our muni CEF selections have done far better benefiting from the ultra-wide discounts at the start of the year.

  • Discounts are now back to one-year averages and the easy money has been made.

  • We do think that we will continue to see tightening discounts and that they could make a run for 52-week highs.

Muni Market Update | January

Muni Market Update | January

Executive Summary:

  • Munis are suddenly gaining fame because of their durability during the recent downturn.

  • The rally could be short-lived if the market rallies and rates rise back towards 3%.

  • We think the 'January effect' is well underway and that having some exposure is better than waiting for entry to the perfect fund.

  • There is a lot of potential discount capture (mean reversion on the discount) available still despite the rally.

  • If the Fed pauses, the rally in muni CEFs could extend beyond January and we could ("could") move back towards the high valuation levels seen in the summer of 2017.