Dave, I am actually a fan of these funds right now. I expect rates could go higher, but if so, a crash would occur that would return them to the bull cycle, ala 1987.
Many of these funds now yield more than Treasuries before the tax advantage, which is unusual. Of course, many are also leveraged, so there is more risk than straight bonds.
I tend to go for the insured bond funds. Why take the credit risk when it costs so little to get somebody else to take it? My current favorite is the BlackRock Insured 2008 (BRM), which sells at a whopping 15% discount. The yield is lower than longer maturity funds, but if you factor in the 1.5% a year you get in discount amortization, it looks like a bargain. The mgt. fee is high but not higher than average for these types of leveraged funds. And risk seems minimal with 8 years of maturity and the insurance in place.
Smith Barney Intermediate Muni (SBI) is another good one, though it is not insured, has no leverage and does not have a closing date. But it is well managed and sells at a deep discount.
If you are more bullish than I am, Putnam's High Yield (PYM) is a petal to the metal sort of high risk bond fund. Not my style, but, within that style, the performance has been good and the 12% discount looks dandy.
BTW, I got my Malarky game with the discount at Amazon. I'm giving it as a Xmas gift if I don't unwrap it and play before 2 weeks are up. <g> |
