Hi Bud,
Here is an interesting article about a Municipal Bond Fund. I thought they were presumably safe.
quote.bloomberg.com
`Sophisticated' to `Amateur': A Heartland Tale (Update1)
By Robert Whalen
[snip]
That was before $58,000 of his money shriveled to about $14,000 overnight, following the Oct. 13 revaluation of two high- yield municipal bond funds managed by Heartland Advisors in Milwaukee. The Heartland High-Yield Municipal Bond Fund's net asset value fell 70 percent to $2.45 a share from $8.01, and its Short Duration High-Yield Muni Fund fell to $4.87 from $8.70, or about 44 percent.
``Before this happened, I considered myself to be a mildly sophisticated investor, but now I think I'm more of an amateur,'' Baker said. ``I looked at the fund reports that were sent out and they were all glowing. There was no way for me to know this was going to go the way it went.''
``It's part of their mother's inheritance. I feel stupid about it now, but I really thought this was a relatively safe investment,'' Baker said. ``I'm a conservative investor.''
Most municipal bond funds, even those that call themselves high-yield, have most of their assets in investment-grade securities. Their top-20 holdings usually don't look too much different from a general municipal bond fund's holdings. This is why the big devaluations in the Heartland funds have mystified observers.
Take a look at the chart, looks like some of my chip stocks.
quote.bloomberg.com
Keith |
