Basics of Municipal Bond CEFs
We recorded this video to help investors and financial advisors get a sense of what to expect and look for when seeking federally tax-free income in municipal bond CEFs. We focused on answering the following questions:
1. Why would someone buy municipal bond exposure through a CEF vs. other options?
2. One-third of all CEFs are focused on municipal bond, are they attractive now?
3. What is going on with earnings and UNII trends for municipal bond CEFs?
4. Why type of investor typically buys municipal CEFs?
5. What does a typical municipal bond portfolio look like as a CEF?
6. What are some key things you look for in a municipal bond CEF?
7. What are the risk factors to watch for with municipal bond CEFs?
Muni investing through CEFs is the only way our firm knows that you can take a leveraged muni bond portfolio and keep the tax-free nature of the yield vs. applying leverage in your own investment account. Also, when discounts are as wide as they have been recently, it is easy to argue that you are getting the professional management for “free” because you are buying for “extra yield” from the discount than the friction or drag of management fees on the portfolio’s net asset value (NAV).
We regularly give updates on all CEF sectors including municipal bond CEFs in our quarterly CEF research call and periodic Municipal bond webinar.
Watch Video Here: http://vimeo.com/johncolescott/muni-cefs