RMUCX [Oppenheimer Rochester Fund Municipals, C class]

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Topic Author
zratis
Posts: 97
Joined: Sun Jul 27, 2014 10:20 am

RMUCX [Oppenheimer Rochester Fund Municipals, C class]

Post by zratis »

Hello,

I invested in some RMUCX class C shares more than 6 years ago, and I still own them. It lost about 14% of its value since I bought it. I'm not sure if it will ever come back to its original value. I don't have to sell it, but I was wondering if this municipal investment is worth holding on, especially if there will be any more loss in value. Happy to move this into some index fund but not sure if I want to take a hit yet.

Thank you
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BL
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Re: RMUCX

Post by BL »

Review Other Classes RMUCX
Fund Name Front
Load Deferred
Load Expense
Ratio Min. Init. Purchase 12b-1
Actual Purchase
Constraint Shareclass
Attributes
Purchase Constraint: Institutional - T, Qualified Access - A, Closed to New/All Investments - C/L.
Shareclass Attributes: Available for 529 Only - N, Indirect Use Only - U.
Oppenheimer Rochester® Fund Municipals A - 4.75 — 0.72 1,000 0.15 — —
Oppenheimer Rochester® Fund Municipals B — 5.00 1.62 1,000 1.00 — —
Oppenheimer Rochester® Fund Municipals C — 1.00 1.59 1,000 1.00 — —
Oppenheimer Rochester® Fund Municipals Y — — 0.59 0 — T
Class C from Morningstar:
http://financials.morningstar.com/fund/ ... ml?t=RMUCX

I see that the expense ratio for Class C is 1.59% including a 12b-1 fee of 1.00% (That is the highest I have seen by far.). Is your broker also charging an AUM management fee? Who sold you Class C funds?
That is way too expensive and someone is raking in 1% for doing nothing!

Edt: In addition, IIRC, Class C funds never revert to the cheaper ER Class A funds like Class B funds do, so there is never a good reason to buy these except to fund your broker's retirement! I am surprised they still exist.
Beat The Street
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Re: RMUCX

Post by Beat The Street »

I am showing the total return the last 6 years is an annualized 6.18%, compared to Vanguard's NY Long Term Tax Exempt which earned 6.19%. So maybe you are saying the NAV is losing money?

The problem is that RMUCX has taken a lower average credit quality (BB compared to Vanguard's A) and much longer duration (13.07 compared to 6.31 for Vanguard) which has greatly increased the volatility (7.52 compared to 4.23 for Vanguard) without getting compensated for the extra risk. And this was even during a time where rates declined so the longer duration fund should have done better! The extra return was taken away in expenses most likely. You still earned a decent return, but could have done so with less risk and less expenses.

The NAV will continue to decline if rates go up, given the duration exposure. If you are wanting to stick with muni funds I think Vanguard has clearly done a better job managing theirs than Oppenheimer has.
“Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have—or don’t have—in their portfolio.” -Taleb
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grabiner
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Re: RMUCX

Post by grabiner »

zratis wrote:I invested in some RMUCX class C shares more than 6 years ago, and I still own them. It lost about 14% of its value since I bought it. I'm not sure if it will ever come back to its original value. I don't have to sell it, but I was wondering if this municipal investment is worth holding on, especially if there will be any more loss in value. Happy to move this into some index fund but not sure if I want to take a hit yet.
This is a bond fund, so most of the value comes from dividends, not changes in share price. If you sell the fund, you can deduct the capital loss on your taxes.

However, you probably don't want to just "move this into some index fund"; assuming you are thinking of stock index funds, that would increase the risk of your portfolio. You could sell this fund and buy a stock index fund (such as Vanguard Total Stock Market Index), and then keep your risk level constant by moving an equal amount from stocks to bonds in your 401(k) or IRA.

Alternatively, you could sell this fund and buy another bond fund. If you switch to Vanguard NY Long-Term Tax-Exempt Admiral (which is not an index but behaves much like one), you would save 1.47% in expenses. The yield would go down because Vanguard holds less risky bonds, but that risk reduction is probably worth it, since the reason you hold bonds in your portfolio is to reduce the risk and the Oppenheimer fund proved in 2008 that it didn't do so.
Wiki David Grabiner
AviN
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Re: RMUCX

Post by AviN »

I wouldn't trust an Oppenheimer bond fund:

http://www.bogleheads.org/forum/viewtop ... 5#p1647096
Topic Author
zratis
Posts: 97
Joined: Sun Jul 27, 2014 10:20 am

Re: RMUCX

Post by zratis »

Thank you for all the responses...

It's interesting I posted this question right before getting a notice on this fund that there is a group litigation because of the drop in NAV around the time of the market crisis in 2008. I may have a way to repair the damage done to the value of this, but it's uncertain right now.

Does anyone think there's a benefit in waiting until this clears?

Thank you
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grabiner
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Re: RMUCX

Post by grabiner »

zratis wrote:Thank you for all the responses...

It's interesting I posted this question right before getting a notice on this fund that there is a group litigation because of the drop in NAV around the time of the market crisis in 2008. I may have a way to repair the damage done to the value of this, but it's uncertain right now.
If the litigation leads to a payment, any payment would go to everyone who was damaged; this would be the people who held the fund at the time, not those who held it at the time of the ruling or settlement.

Thus you should sell the fund now if it doesn't fit your current needs.
Wiki David Grabiner
Topic Author
zratis
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Joined: Sun Jul 27, 2014 10:20 am

Re: RMUCX [Oppenheimer Rochester Fund Municipals, C class]

Post by zratis »

I held it at that time. Anyway, thank you for the response.
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