LEO BYN Mellon Muni bond fund

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Topic Author
capran
Posts: 178
Joined: Thu Feb 18, 2016 10:45 am

LEO BYN Mellon Muni bond fund

Post by capran »

About 1 1/2 years ago we inherited a small position in LEO, about 5200 shares. It used to be 5 star (morningstar rating). I remember a cut in 2018 in the payout, but the monthly dividend has been steady ever since. But recently it went from 4 to 3 to now 2 star ratings. from Stockopedia: "FINANCIAL BRIEF: : For the six months ended 31 March 2019, BNY Mellon Strategic Municipals Inc revenues decreased 6% to $19.1M. Net income applicable to common stockholders totaled $21.2M vs. loss of $1.9M. Revenues reflect a decrease in demand for the Company's products and services due to unfavorable market conditions. Net Income reflects Net unrealized appreciation (depreciation increase from $16.7M (expense) to $6.1M (income)." Have also watched the share price decline when the market took a nose dive a few months back. Sure seems like a 5.5% yield is good in this climate. (we get 183.33 every month on those 5230 shares). I looked back Long term at the price volatility and wonder if it's a buy, hold or sell. Our Vanguard Prime is now down to .26%, so the 40k in interest earned is going to be 5k going forward, but am very risk averse and reluctant to chase returns if it means accepting the resulting volatility. any thoughts from the BG community?
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unclescrooge
Posts: 5515
Joined: Thu Jun 07, 2012 7:00 pm

Re: LEO BYN Mellon Muni bond fund

Post by unclescrooge »

It's a closed end fund. As capital is returned, existing funds are reinvested in lower yourself bonds, and no new casual is raised, it seems pretty obvious that income is going to decline.

I think Barron's had a write up about it recently.
Topic Author
capran
Posts: 178
Joined: Thu Feb 18, 2016 10:45 am

Re: LEO BYN Mellon Muni bond fund

Post by capran »

Thank you. Had not seen that article that mentions LEO. "Where to Find the Best Municipal-Bond Fund Buys" By Randall W. Forsyth
June 10, 2020 11:28 am ET . And thank you for your explanation as to why yields will likely continue to go down, as older bonds expire and are replaced with lower yield bonds, if I am hearing you right. Given the prime interest falling off the cliff, it makes the LEO holding seem like a gold mine. (The LEO holding valuation of 40,800 currently producing a monthly tax free dividend of $183.33 vs 1.88m producing $456 monthly). At least it helps me be prepared that LEO, too, will begin to fade. Hopefully the fed program of bond purchases won't affect the little bit of income and valuation of a few other individual bond holdings.
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