Horgad, Munis rarely default, but that only means something if you own a big list of them. If yours goes under, and you own 20 or less, you will notice. That's why I always use closed end muni funds selling at discounts. If I own a fund that has 60-200 munis, and I own several funds, my risk of one or two defaults is minimal. Insurance is also good. I am leery of the muni insurance cos. as stocks, but have no fear about their insurance, so going for insured munis is a good safety valve.
The big knock against CEFs, as opposed to individual bonds, is that the individual bonds come due at some point. There are a handful of CEFs with maturity dates, too. But the main point, IMHO, is, what do you plan to do with the cash when the bonds mature? If you plan to spend it all or die, fine. Otherwise, you have to reinvest, so you are in the same place you are with a fund. |
