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Unexplainable Weakness Continues in Municipal Bond CEFs

Posted June 14th, 2007 by Michael J Bomma...

    In late May, I had noted that over 25% of the lowest performing funds on the week were municipal funds, primarily those offered by BlackRock and Nuveen.  Here's an update on those funds I covered then.

 

Symbol May YTD Current YTD % Change
BHV -5.80% -16.50% -10.70%
BSD -4.33% -9.33% -5.00%
NUJ 0.76% -4.14% -4.90%
APX -0.38% -5.12% -4.74%
BFK -7.39% -11.71% -4.32%
MUJ 1.09% -3.19% -4.28%
PCK -1.06% -5.07% -4.01%
NOM -2.03% -6.04% -4.01%
BKN -8.97% -12.41% -3.44%
NXJ -3.63% -6.80% -3.17%
BFZ -1.80% -4.27% -2.47%
BKK -0.39% -2.53% -2.14%
BWC -0.71% -2.77% -2.06%
NXC 0.50% -1.28% -1.78%
NXE 4.38% 2.99% -1.39%
FMN 0.80% -0.33% -1.13%
BQH -2.78% -3.62% -0.84%
EIP 3.92% 3.08% -0.84%

    For perspective, I've included a comparison of the worst % change performers since I started this analysis against a Morgan Stanley municipal fund. 

    Note that the BlackRock Strategic Municipal Trust  is down more than 5% relative to the MS fund YTD.  The Virgina fund seems to have the worst time of all, trading at over 10% below the MS fund YTD.  There are a number of possible reasons for this, though none seem particularly clear.  Some of this might be competition taking its toll in the CEF market, some an instance of issuer credibility premium, and obviously some related to yield changes, but overall, there is still some broad and high-dollar-value selloff going on in municipal bond CEFs.