Baird Intermediate Muni vs Baird Short Muni

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RNJ
Posts: 764
Joined: Mon Apr 08, 2013 9:06 am

Baird Intermediate Muni vs Baird Short Muni

Post by RNJ » Thu Oct 11, 2018 10:47 am

I'be been a shareholder of BMBIX (Int) for several years. I just noticed that the yield spread between this fund and Baird's short-term option (BTMIX) is 5bp (2.3% / 2.25%). Duration, ~4.4 / 2.4, respectively; credit quality AA vs A).

I live in NY (8.9% income tax), and I've got some losses from BMBIX that I can harvest. It seems a reasonable swap to make (BMBIX -> BTMIX), but I'm hoping for some thoughts, feedback.

My preference is to stick with Baird vs VG's intermediate-term offering as I'd rather not increase my risk.

Thanks!

jebmke
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Joined: Thu Apr 05, 2007 2:44 pm

Re: Baird Intermediate Muni vs Baird Short Muni

Post by jebmke » Thu Oct 11, 2018 11:00 am

If I follow your numbers, the swap would seem to make sense. There doesn't seem to be much compensation for the term risk on intermediate. This is also reflected in the treasury yield curve where there doesn't seem to be a compelling reason to go beyond the 2-year mark.
When you discover that you are riding a dead horse, the best strategy is to dismount.

RNJ
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Joined: Mon Apr 08, 2013 9:06 am

Re: Baird Intermediate Muni vs Baird Short Muni

Post by RNJ » Thu Oct 11, 2018 11:17 am

jebmke wrote:
Thu Oct 11, 2018 11:00 am
If I follow your numbers, the swap would seem to make sense. There doesn't seem to be much compensation for the term risk on intermediate. This is also reflected in the treasury yield curve where there doesn't seem to be a compelling reason to go beyond the 2-year mark.
Thanks - that was my thought, as well (treasuries, too). Always looking to feed my confirmation bias :happy

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matjen
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Re: Baird Intermediate Muni vs Baird Short Muni

Post by matjen » Thu Oct 18, 2018 11:33 am

I don't know about this RNJ. It seems to me that the Vanguard Muni funds are also "A" like BTMIX. Point being that what makes BMBIX so unique is how relatively safe it is. The advanced refunded percentage is way lower in BTMIX as well. So you go from AA to A and from 54.65% Advance Refunded to 16.65% Advanced Refunded. You do drop 2 years in duration though.

I just sold a chunk of BMBIX but I think I am going to just let the cash sit for 30 days. These days that cash can earn 1.5% (though not tax advantaged obviously)
A man is rich in proportion to the number of things he can afford to let alone.

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