Correlations between municipal bonds and Treasuries are back on the rise after a bifurcation during the financial crisis.
Despite their extra income, nonrated municipal bonds can expose investors to lower-credit-quality, less-liquid issues with a tremendous research requirement, says Morningstar's Eric Jacobson.
Morningstar's Miriam Sjoblom discusses how to gauge whether a muni fund is more apt than a taxable-bond fund, yield risks and other key focus points, and some of her muni-fund recommendations.
Morningstar associate director of fund analysis Miriam Sjoblom explains what drove municipal bonds' great performance in 2011 and what issues may lie ahead for muni investors.
As the Fed intends to keep interest rates low for the next few years, muni-CEF investors should maintain a close watch on their funds' call exposure.
The muni market still faces challenges, but with careful research and disciplined risk control, muni investors have plenty of opportunity, says Fidelity's Mark Sommer.
Despite risks in the muni-bond market, defaults are isolated, and the diversification in muni CEF portfolios helps protect against credit problems.
Although some opportunities are available today, muni investors should be sure they are getting compensated for the risks they are undertaking, says Fidelity's Mark Sommer.
While some investors are buying, others don't like the uncertainty of municipal bonds.
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