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Leveraged Muni Funds


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Has anyon elooked at these types of funds?  The PIMCO ones have purchased munis and levered them woith short-term LIBOR based funding.  The current tax-free yields range from 6.7% to 7.9%.  Pretty good in this environment.  I haven't purchased any but was just wondering about folks experience with them.  TIA

 

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Pls see my comments at

 

http://cornerofberkshireandfairfax.ca/forum/index.php?topic=4713" data-ipsquote-contentclass="forums_Topic" 48208;topicseen#msg48208

 

The yields were higher when I bought...the biggest potential problem I see (other than a replay of 2008-2009 is the reduction of the CEF premium, which is substantial, but I believe justified because of the yield. The yield on net value is huge. Premium erosion is a risk, but I am not sure what would trigger its decline. 

 

The current after tax equilivant yield is very good.

 

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  • 2 years later...

I opened a small position in PCQ when it traded at a slight discount to NAV.

 

7% market yield and since I am in Cali, the tax-free yield is even more juicy.

 

No special insight. I just think some muni investors overreacted and it is rare for these PIMCO closed-end funds to trade at discount so I had to nibble a bit.

 

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I am thinking about buying some for my father in law, who is from Taiwan and a non-resident alien.

 

I am wondering whether anyone on this board is in similar situation. Do anyone know how the dividend is taxed.  Will the dividend be tax-exempt or taxed at 30%?

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I bought Cali munis in general (CMF) and MCA for my levered position. They offered ~ 3% and 7% yields at the time.

 

I already had several positions in my portfolio that would do well if interest rates rise. This seemed like a good opportunity to add to the other side of that bet.

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I am thinking about buying some for my father in law, who is from Taiwan and a non-resident alien.

 

I am wondering whether anyone on this board is in similar situation. Do anyone know how the dividend is taxed.  Will the dividend be tax-exempt or taxed at 30%?

 

http://www.irs.gov/taxtopics/tc851.html

 

 

check out the above to see if he can qualify as "resident" under the IRS test.

 

sorry, can't help much...but

good luck.

 

 

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Anyone have any picks for bond funds in general?  I hear Doubleline a lot.  And I know Third Avenue and Fairholme have distressed funds.

 

I want to do the homework now so when there is another opportunity in the bond markets I can have a play set up.  The opportunities in distress and PL RMBS were amazing from 2009 to 2011.  I want to make sure I can take advantage of it next time.

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