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Alpine Total Dynamic Dividend F Message Board

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  • cryptomeria12 cryptomeria12 Aug 16, 2010 3:12 PM Flag

    Crypto, another question please

    try2...Have been reading your postings for some time now. Am wondering if you are aware of any decent tax free muni bond funds. For some reason there doesn't seem to be much discussion about those investment vehicles.

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    • Crypto:

      Since I am retired and follow CEF muni funds I will offer some options you might wish to investigate.

      If you believe there is a possibility of significant default on muni bonds you will want to purchase funds that are insured against default. EIV and EIM (two Eaton Vance insured muni funds) yield an average of 6.8 - 7.0% tax free income and pay monthly. They are the highest yielding, best quality insured funds I have been able to find. EIV covers its monthly dividend with investment income. It has about two months of UNII reserve and the reserve has been growing slowly over the last year. EIM's income and dividend are about equal. They have a good UNII reserve. Both EIV and EIM payments are not subject to the add back which is used to calculate AMT.

      PMX Pimco muni income III yields 7.2-7.4%. 74% of the portfolio is A rated or higher. It is not insured. None of its dividends are subject to the AMT add back.

      NMZ Nuveen high income fund is one of the highest yielding muni funds 7.6-7.8%.
      Only 16% of its portfolio is A rated or higher. 15% of the dividends are subject to the AMT add back. Income is just slighlty higher than dividends. UNII stands are .023 as of the end of July. One needs to closely monitor the income versus dividend numbers of the fund to ensure that income does not fall behind the dividend. Nuveen makes that easy by publishing financial numbers monthly. So while the risk is higher, the fact that you can monitor financials monthly lowers that risk (at least in my eyes).

      BlackRock also has some good insured funds - MUS and MFL are the best. However their yields are in the low 6s. They do have some non insured funds that pay in the mid 6s. BlackRock also reports data monthly which makes it easy to monitor income versus dividends. The AMT exposure is from 15% to 25% for most muni funds.

      Invesco/Van Kampen funds yield close to 7%. VGM and VMO are the two best. Both funds have big UNII reserves which insure stability of dividends. Both have incomes slightly higher than monthly dividends. AMT exposure is higher. Percentage of portfolio A rated is also high.

      Federated FMN is an excellent muni fund with no AMT exposure. You need to buy when yield is close to 7%. A rated securities are high. Big drawback is that Federated only reports financials every six months.

      Pioneer also has a great fund MAV but the AMT exposure is 32%. MAV has a big UNII reserve and income is substantially higher than dividend. Pioneer in general is an excellent fund manager.

      If you distill all of the above data down - EIV is the best insured fund. PMX is best quality undervalued muni fund based on its yield but does sell at a premium to NAV. NMZ and MAV are excellent for high yield muni funds. VGM and VMO are flagship funds if you have no concern about AMT. My analysis is based on a spread sheet that tracks about two years of monthly data on all the above funds. If you have any questions let me know.

    • No one wants to pay taxes. Why would muni
      bonds be safe?

    • Have not. Sorry.

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