If you manage a big-yield portfolio in a “taxable account,” this report is for you. Municipal bonds are often exempt fom paying federal income tax, which means you can earn a higher “tax equivalent yield.” What’s more, certain well-managed and prudently-leveraged munipal bond CEFs trade at discounts to NAV and offer particularly compelling yields as management is taking actions to reduce the discounts (a good thing if you own them). In this report, we review two attractive big-yield muni bond CEFs that are worth considering for your taxable account.
Muni Bond CEFs: Big-Yields, Historic Discounts to NAV
If you don’t like paying taxes, like most of us, you may have noticed that municipal bond closed-end funds are still trading at historically large (and very unusual—attractive!) discounts to NAV. The “magic” of a municipal bond, is that you generally don’t have to pay federal income tax on the income—so if you’re in a high tax bracket—munis can be quite lucrative (especially on a “tax-equivalent” yield basis). In this report, we share data on over 75 big-yield municipal bond CEFs, discuss the current historical opportunity (including how funds are actively working to reduce the discounts!), and then share a few thoughts on particular muni-bond CEFs that you may want to consider for investment.