Hi Chamois-

 I am a great believer in looking forward first and looking backwards second, otherwise you get the cart before the horse.

 Looking forward, if a person assumes tax rates will rise, then you are in a large crowd of people advocating the purchase of munis. When you look backwards, CEF munis have outperformed OEF's over the last five and 10 year periods, so it looks like a good place to be.

Looking forward, if you believe Buffett, he said in his big interview on CNBC when asked about where he saw opportunity, he said....in fixed income.Besides, at my age, fixed income meets both my psychological needs and my financial goals.

 If you look back at the last 10 years  which had both good and bad years so it a unique time period, you find that of all the bond funds, the best places to be were in world bonds, emerging market bonds, and multisector bonds. Haven't heard any good argument as to why that trend witll not continue.

My pick for moderate allocation is LSBRX.

My picks for emerging market/ world funds are GIM and AWF... and there are several other newer funds in this group which look attractive. AWF is what I call a gold standard fund - I use it as a yardstick to measure other options. I like brand names. Templeton is the brand name in global investing, but their bond funds have a load.

At the end of the day, as you well know, there are few right or wrong answers and each of us invests based on some bias. My preference is to hold LSBRX rather than MGF or ACF because it is up 10% over the last 5 years and MGF is up 5% and ACF is up around 7%.

Hope that helps. Ed

Chamois again-

Can you explain migrating???

At the end of the year, I take the IRA distribution and part of it goes to the IRS for taxes and part "migrates" into a personal account. Can you "migrate" funds like you "migrate" cash from one account to another?

Ed

Ed, I was using migrate simply to mean moving from the IRA account to a taxable.  You can move either cash or securities from the IRA to your taxable account.  I usually don't allow cash to build up in our IRA accounts, so it's easier just to have the RMD moved in the form of designated shares (in-kind transfer).  Saves some transaction costs as well.

Some brokers will automatically first take out the cash in the IRA  before calculating the number of designated shares needed to meet the RMD, but you can instruct them otherwise.  Best wishes

Chamois: Learned something new. Didn't know I could move funds out of IRA. That is very helpful!!

As usual, I have some questions.

In the past 5 or 10 years, Van Kampen and Blackrock muni funds have been among the top performers. When you recently bought muni funds, they were mostly Van Kampen. Did you reject some of the Blackrock funds and if so why?

 I usually spread my bets across sub sets, so, investing in munis, I would think of hi yield, intermediate term, long term etc. Virtually all of the CEF munis you bought were long term. What am I missing?  ED

Ed, your annual withdrawal may be more complicated by virtue of the broker  tax withholding you mentioned.  They may need cash for that purpose. I don't have tax withheld, and I make a selection each year as to the date and manner of distribution.

In selecting muni funds, my main criteria are, at the time of purchase, AMT exposure, discount from NAV and  distribution rate.  Recently, Van Kampen seems to have had the best combination.  I use PIMCO when they are not at a premium.  I really haven't looked at Blackrock recently, but tend to avoid them simply because of their bundled reports, which I find harder to research.  Most of my muni exposure is in laddered individual state municipal bonds, which are hard to buy through CEF because of the low trading volumes.

 I realize  that discounts reported by muni CEF are only guesses because of the underlying  bond pricing artificialities, but discounts  seem a buffer to the frequent changes in distribution rate common to these funds..

There is no question about the ability of Dan Fuss and the quality of LSBRX,but I had the notion that it was closed to investors through brokers.  I'll take another look, since the total returns are compelling.  Thanks for the response,  Bill

 

Hi Again-

As to laddered state munis, I agree that there is a problem with the CEF's because of low volume. In addition, the best performing muni CEF's over 10 years have overwhelmingly been Blackrock single state funds. I don't think you or I would buy them now because that record was achieved as these funds went from a discount to a high premium. These premiums now range from 8% to 19%. The Virginia fund BHV has a premium when I last looked of 12.99%.

The case you present for Van Kampen funds is very compelling. I have been assuming that the tax rates will go up and that there will be more buyers than sellers of muni bonds and that the Van Kampen (and other) funds will go up in price while the yields will go down.

Although the yields should go down as the price goes up, your yield ( or mine) is really based on cost and will vary if the management lowers or raises the dividends.

Am I missing anything?

Ed

Two other factors I try to keep in mind, but don't know how to quantify, are the dislocation of muni prices due to the credit freeze and the pending  Supreme Court decision.

 Lots of munis were dumped on the Market over Dec-Jan as hedge funds had to raise cash in a hurry, creating some real bargains.  To the degree that this is over and done with, price increases to normal may be a one shot affair.

The SC seems to be taking an inordinately long time to decide Kentucky v Davis, suggesting that they may tinker with related issues, such as private use and auction rate munis, even if they retain the status quo on the main issue.  This could impact both individual munis and the funds that hold them, particularly CEF where retail investor sentiment plays an outsize role.

 I find I can buy LSBRX without fees through my broker, so plan to switch some MGF to Dan.  Thanks for the tip!
 
 

Glad I gave you a helpful idea re LSBRX.

 Understand your rationale for buying Van Kampen. It makes great sense.

Not sure I understand the complete rationale for having EVV as your largest FI holding. If I am correct, you bought EVV because of some of the same reasons you bought Van Kampen  - acceptable discount, great yield and you were satisfied when you dug into the detail. Were there other factors you took into account and why did it look superior to some of your other FI options leading you to invest more there?

Good morning Ed; I think I was careful to add the "one of my" modifier to the word largest,.  I should also have added CEF, since the majority of FI holdings is in individual bonds.

I chose EVV partly because it combines three types of FI in areas which lack correlation and partly because of the limited duration, which makes the fund less sensitive to rate changes.  The fund has not done well over the past year or so and my additions to it have been recent, believing the sell off in all three areas of the fund are maybe overdone.    It is in no way a buy recommendation for others..  Best wishes!  Bil

Thanks.

Your comment about the three types of FI made me think about being younger in the days when ice cream basically came in three flavors. Now, there are more flavors than I can count. Same is true of these FI vehicles. The permutations and combinations are endless and when you try to search ..like using Bloomberg  -- under one rubric, you get a dog's breakfast.

Ed

Ed,

I agree that the VK CEF muni's are generally good values. If you're still looking for more CEF muni's, I suggest that you take a look at a Western Asset fund (MHF). It's virtues are:

(1) No leverage so no risk from APS transitions

(2) MHF sells at a slight discount (about -3% the last time I looked) 

(3) No AMT (at least as represented on ETFConnect)

(4) MHF sports a yield of about 5.45% 

(5) The credit quality looks fairly decent 

 David

Hi David

Not trying to nitpick here, just looking at benchmark comparisons--you say MHF has a fairly decent credit quality, but ETF-connects shows about 50% BBB or lower.From my perspective (retired, conservative investor) I would classify that as fairly risky.  Naturally, the higher yield-higher risk might appeal to someone with a longer time perspective, and certainly the absence of leverage al