|
|
|
|
| BondsOnline.com: instant access to and extensive coverage of over 3.5 million stocks, bonds, indexes and other securities covering major and emerging markets and exchanges across the globe. |
|
|
| Bonds Online |
|
|
| 5/10/2013Market Performance |
| Municipal Bonds |
|---|
|
S&P National Bond Index
|
3.00% |
|
|
S&P California Bond Index
|
2.96% |
|
|
S&P New York Bond Index
|
3.13% |
|
|
S&P National 0-5 Year Municipal Bond Index
|
0.70% |
|
|
| S&P/BGCantor US Treasury Bond |
400.09 |
|
| More |
|
| Income Equities: |
|---|
| Preferred Stocks |
|---|
|
S&P U.S. Preferred Stock Index
|
848.03 |
|
|
S&P U.S. Preferred Stock Index (CAD)
|
636.26 |
|
|
S&P U.S. Preferred Stock Index (TR)
|
1,701.05 |
|
|
S&P U.S. Preferred Stock Index (TR) (CAD)
|
1,276.26 |
|
|
| REITs |
|---|
|
S&P REIT Index
|
174.07 |
|
|
S&P REIT Index (TR)
|
425.30 |
|
|
| MLPs |
|---|
|
S&P MLP Index
|
2,469.58 |
|
|
S&P MLP Index (TR)
|
5,428.50 |
|
|
See Data
|
|
|
|
 |
|
|
|
|
|
|
Who's Afraid of Munis?
Not adviser Dick Bellmer, who's selectively bullish on tax-exempt bonds |
THE WALL STREET JOURNAL - By SHEFALI ANAND
Recent bad news about municipal bonds has created opportunities to buy them at lower prices, say advisers at Deerfield Financial Advisors Inc. in Indianapolis.
Some attractive municipals have tax-exempt yields that, for a high-income taxpayer, would be equivalent to around 5% on a taxable bond. And "where are you getting a 5% [taxable] yield with not a lot of risk?" says Dick Bellmer, Deerfield's founder and president.
Municipal bonds are issued by states, cities and other agencies to finance public development such as roads, airports and hospitals. The interest paid on these bonds is usually exempt from federal taxes, making them very attractive for wealthy investors.
Since late last year, however, investors have been selling these bonds amid fears that cash-strapped states and municipalities might not be able to make their bond payments. Large withdrawals from municipal-bond mutual funds have further depressed prices.
Advisers at Deerfield say that these concerns are overblown and that the entire sector is getting maligned unfairly. In general, they believe municipal bonds have a lower default risk than corporate bonds. Some types of municipal bonds essentially carry no default risk—like "pre-refunded bonds," whose principal and income is typically secured by an irrevocable trust of U.S. Treasurys, says Mr. Bellmer. Even the price of those bonds has fallen in recent months. "The baby got thrown out with the bath water," Mr. Bellmer says.
In this column, we feature model portfolios from prominent financial advisers who invest in mutual funds and exchange-traded funds. Mr. Bellmer, 66 years old, founded Deerfield in 1985. He is a previous chairman of the National Association of Personal Financial Advisors, an organization of financial advisers who are paid only by customer fees, not product commissions. Deerfield currently manages $500 million in assets, primarily for individuals.
Mr. Bellmer says his investment team looks beyond the credit ratings of municipal bonds to determine the potential for default. They look at "the underlying fundamentals of how the bond is set up and how it's going to get paid," says Mr. Bellmer.
The Deerfield advisers like "essential service" revenue bonds, such as those backed by income generated from water and sewer plants.
"Odds of a municipality being able to function without a sewer system are remote," says Brad Cougill, a partner at Deerfield. If anything, these organizations have the ability to increase their fees when needed and thus pay their bondholders, he says.
For the complete article.
|
|
|
|
|
|
| Partner Market Place |
|
|
|
| Stuff to look at |
Yield and Income Newsletter: A must have for income investors. subscribe NOW
S&P Commentary and Newsletters: S&P
|
|
| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
Keep up with monthly, in-depth coverage of fixed income market strategies, commentary, and insights as seen by our sources. Sign up for the free BondsOnline Advisor now!
Unsubscribe here [+] |
|
|
|
|
|
|
|
|
