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Denbury Resources Inc. Message Board

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  • soscorp soscorp Jan 7, 2004 9:31 AM Flag

    Off Topic

    Found it, MuniVest Fund. Should I be concerned that so many city & state budgets are currently red? How would you project this fund will preform in an increasing interest rate environment?

    Dan

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    • MVF averages AA bonds. Morning star has 4 stars mty 16.6 years duration 7.32 selling at a discount to actual value -8.29% Will the price go down as rates go up what do you care you are hedged on the other side?

    • I like closed end muni bond funds and hold several of them, though not MVF. But there are a number of things to keep in mind. One, they generate a high yield because they invest in long-term bonds, and with interest rates set to rise, this involves a risk. Second, the risk is compounded by their leverage. I note MVF is 32% leveraged. That means they're borrowing short and investing long. Finally, you should inquire into how much of their "tax-exempt" holdings are subject to AMT. I suspect that a lot of investors are going to meet up with the AMT for the first time this year, and they are not going to like what they see.

 
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