| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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While Muni Fund Investors Flee, Others Pounce |
Bloomberg Business Week - May 12, 2011 - By Elizabeth Ody
Fiscal crises in states and cities have prompted big withdrawals from muni-bond funds. Investors with more risk tolerance are being lured by yields near 4 percent
The fiscal crisis in states and cities is a buying opportunity for John Hirsch. He's been snapping up municipal bonds since the beginning of the year, taking advantage of falling prices as muni mutual funds are forced to sell bonds to cover withdrawals. Hirsch, 57, is looking for income and isn't worried about fluctuating market values. "I have no interest in trading bonds," says Hirsch, a consultant to the medical industry in Clermont, Fla. "I'm going to hold until maturity, and at maturity I'll get the face value back."
Investors have withdrawn about $48.5 billion from U.S. municipal-bond mutual funds since Nov. 10, pulling money for 25 weeks straight, according to Lipper US Fund Flows, a research company in Denver. Those withdrawals have forced mutual fund managers to sell, putting downward pressure on prices. Investment-grade muni-bond prices have dropped 3.7 percent in the six months through May 6, as measured by the Bank of America Merrill Lynch (BAC) Municipal Master Index. That has driven yields on bonds in the index, which rise when prices fall, to 3.74 percent, which is equivalent to a taxable yield of 5.75 percent for an investor in the top 35 percent federal tax bracket. That's up from 3.46 percent on Nov. 10.
Mutual fund muni-bond investors may have been spooked by the financial difficulties facing many state and local governments. In December, Meredith Whitney, the bank analyst who correctly predicted Citigroup's (C) 2008 dividend cut, forecast 50 to 100 "sizable" municipal-bond defaults in an appearance on CBS's 60 Minutes. Since July 2009 there have been 284 defaults on about $8.9 billion of municipal bonds, or 0.3 percent of the $2.9 trillion market.
In the wake of Whitney's comments, "the mutual funds and bond ETFs have taken it on the chin," says Robert Kane, chief executive officer of BondView.com, which provides bond analysis for individuals. "When there's an issue in the marketplace which causes retail investors concern, they kind of run for cover."
At the same time that fund investors have been selling, people like Hirsch have been stepping up direct purchases. Retail investors bought about $3 billion more in individual municipal bonds in the first quarter this year than in the same period last year, according to data on trades of $100,000 or less from the Municipal Securities Rulemaking Board, which regulates muni dealers. Lebenthal & Co. in New York, which oversees about $170 million in municipal-bond separately managed accounts, mainly for individuals, has received about $30 million in new money since December, says CEO Alexandra Lebenthal.
For the complete article.
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