High Yield Muni ETF (HYD)

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puravida
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High Yield Muni ETF (HYD)

Post by puravida » Wed Nov 07, 2018 7:57 am

After 2 years of receiving 4.5% tax free income (in taxable account) from HYD high yield muni etf, the price has dropped quickly the last 2 months and is now 1% below my cost basis. This holding is a small portion of my portfolio and considered to be about 3/4's of my emergency fund, the rest is in money market. Would it be advisable to move out of high yield municipal at this time given rising rates and other factors and perhaps into money market or CD's, something more stable? I know the crystal ball is not working but would be interested in Bogleheads thoughts about high yield municipal at this time. Thanks.
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typical.investor
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Re: High Yield Muni ETF (HYD)

Post by typical.investor » Wed Nov 07, 2018 8:03 am

No, I don't think moving out is wise.

To make yourself feel better, tally only at your purchases (excluding distributions) and look at it that way. Those distributions are adding to the cost basis, so I bet even though it looks like you are 1% below cost, you probably actually have real returns consider how much money out of your pocket you put in.

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SquawkIdent
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Re: High Yield Muni ETF (HYD)

Post by SquawkIdent » Wed Nov 07, 2018 8:15 am

typical.investor wrote:
Wed Nov 07, 2018 8:03 am
No, I don't think moving out is wise.

To make yourself feel better, tally only at your purchases (excluding distributions) and look at it that way. Those distributions are adding to the cost basis, so I bet even though it looks like you are 1% below cost, you probably actually have real returns consider how much money out of your pocket you put in.
+1. Those monthly dividend payouts are making this and any NAV decline easier to take. Not sure I would put my emergency funds in this investment but in general when prices decline I am forced to buy more, not sell. Good luck. :sharebeer

typical.investor
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Re: High Yield Muni ETF (HYD)

Post by typical.investor » Wed Nov 07, 2018 8:31 am

SquawkIdent wrote:
Wed Nov 07, 2018 8:15 am
typical.investor wrote:
Wed Nov 07, 2018 8:03 am
No, I don't think moving out is wise.

To make yourself feel better, tally only at your purchases (excluding distributions) and look at it that way. Those distributions are adding to the cost basis, so I bet even though it looks like you are 1% below cost, you probably actually have real returns consider how much money out of your pocket you put in.
+1. Those monthly dividend payouts are making this and any NAV decline easier to take. Not sure I would put my emergency funds in this investment but in general when prices decline I am forced to buy more, not sell. Good luck. :sharebeer
Ah, it part of the emergency fund. The duration is too long! SHYD (short hyd) whorls have been better but even that isn’t really short.

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grabiner
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Re: High Yield Muni ETF (HYD)

Post by grabiner » Wed Nov 07, 2018 10:38 pm

puravida wrote:
Wed Nov 07, 2018 7:57 am
This holding is a small portion of my portfolio and considered to be about 3/4's of my emergency fund
This is not a good fund for an emergency fund, as it is too volatile. It didn't exist when the bond markets fell in 2008, but judging from its volatility in other time periods, it would probably have lost about 20% in two months, at the same time the stock markets fell.

If you are holding a muni fund for an emergency fund, use something like Vanguard Limited-Term Tax-Exempt, which holds high-quality, short-term munis.
Wiki David Grabiner

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