Munis getting slaughtered!

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Eno Deb
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Re: Munis getting slaughtered!

Post by Eno Deb » Fri Mar 20, 2020 11:35 am

watchnerd wrote:
Fri Mar 20, 2020 11:07 am
That's for muni MM funds.
Ultra-shorts, to be precise. But this should have a positive effect on longer-term bonds too, since it takes financial pressure off the municipalities and makes them less likely to default.

I wonder why VTEB is doing so much better than MUB today ...

Chuck
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Re: Munis getting slaughtered!

Post by Chuck » Fri Mar 20, 2020 12:16 pm

I remember when VNYTX was barfing out 4%. Good old days. I haven't had any muni fund since 2008. The yields are pathetic even compared to I-Bonds.

Eno Deb
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Re: Munis getting slaughtered!

Post by Eno Deb » Fri Mar 20, 2020 12:21 pm

Chuck wrote:
Fri Mar 20, 2020 12:16 pm
I remember when VNYTX was barfing out 4%. Good old days. I haven't had any muni fund since 2008. The yields are pathetic even compared to I-Bonds.
It depends on your tax situation. If you live e.g. in CA and are in a higher tax bracket, a CA muni fund has actually been a very good deal through the last decade or so.

Scooter57
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Re: Munis getting slaughtered!

Post by Scooter57 » Fri Mar 20, 2020 1:07 pm

Munis are funded from the income of airports, stadiums, colleges, etc and sales , gas, and state income taxes which are gone or dropping dramatically for the next couple months. This raises the likelihood of default.

In addition Bloomberg reports that many have call provisions that will let them be replaced with much cheaper bonds, lowering yield

I sold my Vanguard High Yield Muni fund two days ago and parked the proceeds in a no penalty CD after a couple days of record breaking drops. I'm holding my state muni fund as my state manages its finances well.

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gmaynardkrebs
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Re: Munis getting slaughtered!

Post by gmaynardkrebs » Fri Mar 20, 2020 1:15 pm

Scooter57 wrote:
Fri Mar 20, 2020 1:07 pm
Munis are funded from the income of airports, stadiums, colleges, etc and sales , gas, and state income taxes which are gone or dropping dramatically for the next couple months. This raises the likelihood of default.

In addition Bloomberg reports that many have call provisions that will let them be replaced with much cheaper bonds, lowering yield

I sold my Vanguard High Yield Muni fund two days ago and parked the proceeds in a no penalty CD after a couple days of record breaking drops. I'm holding my state muni fund as my state manages its finances well.
Doesn't your state muni fund also include bonds "from the income of airports, stadiums, colleges, etc and sales , gas, and state income taxes" Unfortunately, I don't know of any pure GO muni funds, single state or national.

Scooter57
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Re: Munis getting slaughtered!

Post by Scooter57 » Fri Mar 20, 2020 1:20 pm

It does, but I have more confidence they will recover as our state, once people go back to work, has a solid economy.

High yield implies more risk. My state fund has always paid relatively low muni rates.

DB2
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Re: Munis getting slaughtered!

Post by DB2 » Fri Mar 20, 2020 1:36 pm

Fed is stepping in doing lots of muni bond purchases.

Scooter57
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Re: Munis getting slaughtered!

Post by Scooter57 » Fri Mar 20, 2020 1:36 pm

The AP reports the Fed will help banks buy high rated munis.

https://apnews.com/6c0d9cf9a147e380ab27ef1641cffad9

gr7070
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Re: Munis getting slaughtered!

Post by gr7070 » Fri Mar 20, 2020 1:42 pm

justsomeguy2018 wrote:
Thu Mar 19, 2020 2:56 pm
I just did not expect my bonds to fall 15% during the same period stocks fell 30%. That is not much of a "safety asset" to me.
Looks like your munis have doubled the performance of your equities. What's there not to like?!
justsomeguy2018 wrote:
Thu Mar 19, 2020 2:56 pm
Total position is about $1400 in a small taxable account. I live in an income tax free state.
You're posting about $1400?!

You've probably bought more in TP this week. Granted that's probably the price of one of those 24-packs.

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gmaynardkrebs
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Re: Munis getting slaughtered!

Post by gmaynardkrebs » Fri Mar 20, 2020 1:43 pm

DB2 wrote:
Fri Mar 20, 2020 1:36 pm
Fed is stepping in doing lots of muni bond purchases.
That's for MM funds -- maturity <1Y. Might help longer duration munis, but not that much. MUB is up only about 1%.

Irisheyes
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Re: Munis getting slaughtered!

Post by Irisheyes » Fri Mar 20, 2020 1:54 pm

SF chronicle reporting yesterday that revenues from the Golden Gate Bridge are down sharply.
BART(Bay area Rapid transit) is struggling too with decreased ridership.

Both these entities have lots of muni debt outstanding. BART rating was/is AAA.

This is how the muni market is going to be impacted in a way that was not the case in 2008.

https://www.sfchronicle.com/bayarea/art ... 129802.php

manuvns
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Re: Munis getting slaughtered!

Post by manuvns » Fri Mar 20, 2020 1:59 pm

the margin call to wealthy is also putting downward pressure on Muni and bonds which is directly lniked to stock pricing .

https://finance.yahoo.com/news/wealthy- ... 21359.html

Irisheyes
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Re: Munis getting slaughtered!

Post by Irisheyes » Fri Mar 20, 2020 2:15 pm

Also, looking at the individual CA muni bond offerings on Vanguard today, the AAA offerings with the highest yields are BART (3% ytw, maturity 2028) as well as school/community college district munis from the counties with some of the highest numbers of reported infections -- santa clara and san mateo.

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patrick013
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Re: Munis getting slaughtered!

Post by patrick013 » Fri Mar 20, 2020 3:29 pm

You would think higher grade muni's to be a stable asset. Most short
and interm term AAA's were yielding 3% or higher today. Especially
for small quantities. Very surprising observation.
age in bonds, buy-and-hold, 10 year business cycle

Irisheyes
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Re: Munis getting slaughtered!

Post by Irisheyes » Fri Mar 20, 2020 4:20 pm

patrick013 wrote:
Fri Mar 20, 2020 3:29 pm
You would think higher grade muni's to be a stable asset. Most short
and interm term AAA's were yielding 3% or higher today. Especially
for small quantities. Very surprising observation.
Wondering if a buy yet, or still run away screaming....it's been a long time since one could pick up an AAA with 3% at any maturity, let alone a 10 yr or so maturity.

NY_TaxFreeMunis
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Re: Munis getting slaughtered!

Post by NY_TaxFreeMunis » Fri Mar 20, 2020 7:35 pm

I suppose "slaughtered" is a relative term, but my VNYUX (NY Long Term Tax Exempt) mutual fund has been taking a beating, especially during the past two weeks - it closed at $10.86 today (3/20), down 9.35% YTD. I've held it for a long time, it's mainly accomplished what I wanted it to as part of my portfolio and for better or worse, I intend to ride it out. As others have pointed out, there is no bell that rings at the top or bottom, I would hate to get whipsawed, thinking that the End of Days are upon us.

ImmigrantSaver
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Re: Munis getting slaughtered!

Post by ImmigrantSaver » Fri Mar 20, 2020 10:13 pm

VMLUX is performing much worse than I expected. Thinking of taking the loss and switching to VUSXX. It my house downpayment with flexible timeline money :annoyed

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arcticpineapplecorp.
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Re: Munis getting slaughtered!

Post by arcticpineapplecorp. » Fri Mar 20, 2020 10:17 pm

guess Meredith Whitney was right after all:

https://www.google.com/search?client=fi ... uni+market

but even a broken clock is right twice a day.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

theorist
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Re: Munis getting slaughtered!

Post by theorist » Fri Mar 20, 2020 10:23 pm

Eno Deb wrote:
Fri Mar 20, 2020 12:21 pm
Chuck wrote:
Fri Mar 20, 2020 12:16 pm
I remember when VNYTX was barfing out 4%. Good old days. I haven't had any muni fund since 2008. The yields are pathetic even compared to I-Bonds.
It depends on your tax situation. If you live e.g. in CA and are in a higher tax bracket, a CA muni fund has actually been a very good deal through the last decade or so.
I live in CA and hold the California intermediate and long term tax exempt bond funds in my taxable account with Vanguard. They seem like good deals in general, but they have been taking it on the chin during the steep bear market decline in the last few days! I was wondering whether there was a taxable account alternative that might be a worse deal in normal times, but more stable when people are panicky. Maybe just accept the tax hit and hold treasuries in taxable?

cacophony
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Re: Munis getting slaughtered!

Post by cacophony » Sat Mar 21, 2020 3:13 am

theorist wrote:
Fri Mar 20, 2020 10:23 pm
Eno Deb wrote:
Fri Mar 20, 2020 12:21 pm
Chuck wrote:
Fri Mar 20, 2020 12:16 pm
I remember when VNYTX was barfing out 4%. Good old days. I haven't had any muni fund since 2008. The yields are pathetic even compared to I-Bonds.
It depends on your tax situation. If you live e.g. in CA and are in a higher tax bracket, a CA muni fund has actually been a very good deal through the last decade or so.
I live in CA and hold the California intermediate and long term tax exempt bond funds in my taxable account with Vanguard. They seem like good deals in general, but they have been taking it on the chin during the steep bear market decline in the last few days! I was wondering whether there was a taxable account alternative that might be a worse deal in normal times, but more stable when people are panicky. Maybe just accept the tax hit and hold treasuries in taxable?
I'm wondering the same thing. I've been in CA Intermediate term tax exempt as well as the Intermediate term tax exempt for the past 10 years but at this point they seem to be falling fast and I have short and long term losses on both. Would it make sense to exchange for something else? FWIW, I'm in the 24% federal and 9.3% state tax brackets.

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watchnerd
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Re: Munis getting slaughtered!

Post by watchnerd » Sat Mar 21, 2020 4:39 am

DB2 wrote:
Fri Mar 20, 2020 1:36 pm
Fed is stepping in doing lots of muni bond purchases.
I thought that was just for muni MM bonds?
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

cks
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Re: Munis getting slaughtered!

Post by cks » Sat Mar 21, 2020 8:07 am

patrick013 wrote:
Fri Mar 20, 2020 3:29 pm
You would think higher grade muni's to be a stable asset. Most short
and interm term AAA's were yielding 3% or higher today. Especially
for small quantities. Very surprising observation.
States, agencies, and municipalities go "ratings shopping"- and the ratings companies don't get paid unless they are officially hired by the issuer. So if your rating company has strict standards and rate one city's bonds at grade " B" while a competitor consistently give them a "AAA" rating, guess who gets all the business. It's not a great system. If I remember correctly, the rating agencies had Stockton CA's bonds rated at investment grade within months of the city going bankrupt.

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patrick013
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Re: Munis getting slaughtered!

Post by patrick013 » Sat Mar 21, 2020 8:23 am

cks wrote:
Sat Mar 21, 2020 8:07 am
patrick013 wrote:
Fri Mar 20, 2020 3:29 pm
You would think higher grade muni's to be a stable asset. Most short
and interm term AAA's were yielding 3% or higher today. Especially
for small quantities. Very surprising observation.
States, agencies, and municipalities go "ratings shopping"- and the ratings companies don't get paid unless they are officially hired by the issuer. So if your rating company has strict standards and rate one city's bonds at grade " B" while a competitor consistently give them a "AAA" rating, guess who gets all the business. It's not a great system. If I remember correctly, the rating agencies had Stockton CA's bonds rated at investment grade within months of the city going bankrupt.
Historically bankruptcy for short term AAA Muni's is almost nonexistent. The tables actually say zero percent. Why the recent price decline is probably unwarranted. More info should reveal the story.
age in bonds, buy-and-hold, 10 year business cycle

lgs88
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Re: Munis getting slaughtered!

Post by lgs88 » Sat Mar 21, 2020 8:26 am

patrick013 wrote:
Sat Mar 21, 2020 8:23 am
cks wrote:
Sat Mar 21, 2020 8:07 am
patrick013 wrote:
Fri Mar 20, 2020 3:29 pm
You would think higher grade muni's to be a stable asset. Most short
and interm term AAA's were yielding 3% or higher today. Especially
for small quantities. Very surprising observation.
States, agencies, and municipalities go "ratings shopping"- and the ratings companies don't get paid unless they are officially hired by the issuer. So if your rating company has strict standards and rate one city's bonds at grade " B" while a competitor consistently give them a "AAA" rating, guess who gets all the business. It's not a great system. If I remember correctly, the rating agencies had Stockton CA's bonds rated at investment grade within months of the city going bankrupt.
Historically bankruptcy for short term AAA Muni's is almost nonexistent. The tables actually say zero percent. Why the recent price decline is probably unwarranted. More info should reveal the story.
Didn’t we learn our lesson about AAA-rated instruments in ‘08-‘09?

I hope you’re correct, since my family member has large holdings in a high-quality muni fund that has taken a beating (10% or so), but I hesitate to dismiss Mr. Market’s new assessment of these bonds.
merely an interested amateur

DB2
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Re: Munis getting slaughtered!

Post by DB2 » Sat Mar 21, 2020 8:30 am

watchnerd wrote:
Sat Mar 21, 2020 4:39 am
DB2 wrote:
Fri Mar 20, 2020 1:36 pm
Fed is stepping in doing lots of muni bond purchases.
I thought that was just for muni MM bonds?
I'll have to double check again.

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patrick013
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Re: Munis getting slaughtered!

Post by patrick013 » Sat Mar 21, 2020 8:51 am

lgs88 wrote:
Sat Mar 21, 2020 8:26 am
patrick013 wrote:
Sat Mar 21, 2020 8:23 am
cks wrote:
Sat Mar 21, 2020 8:07 am
patrick013 wrote:
Fri Mar 20, 2020 3:29 pm
You would think higher grade muni's to be a stable asset. Most short
and interm term AAA's were yielding 3% or higher today. Especially
for small quantities. Very surprising observation.
States, agencies, and municipalities go "ratings shopping"- and the ratings companies don't get paid unless they are officially hired by the issuer. So if your rating company has strict standards and rate one city's bonds at grade " B" while a competitor consistently give them a "AAA" rating, guess who gets all the business. It's not a great system. If I remember correctly, the rating agencies had Stockton CA's bonds rated at investment grade within months of the city going bankrupt.
Historically bankruptcy for short term AAA Muni's is almost nonexistent. The tables actually say zero percent. Why the recent price decline is probably unwarranted. More info should reveal the story.
Didn’t we learn our lesson about AAA-rated instruments in ‘08-‘09?

I hope you’re correct, since my family member has large holdings in a high-quality muni fund that has taken a beating (10% or so), but I hesitate to dismiss Mr. Market’s new assessment of these bonds.
There's a big difference between AAA and BBB. There are some defaults expected with BBB at least thru past observations. A good story to watch.
age in bonds, buy-and-hold, 10 year business cycle

Eno Deb
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Re: Munis getting slaughtered!

Post by Eno Deb » Sat Mar 21, 2020 9:47 am

theorist wrote:
Fri Mar 20, 2020 10:23 pm
I live in CA and hold the California intermediate and long term tax exempt bond funds in my taxable account with Vanguard. They seem like good deals in general, but they have been taking it on the chin during the steep bear market decline in the last few days! I was wondering whether there was a taxable account alternative that might be a worse deal in normal times, but more stable when people are panicky. Maybe just accept the tax hit and hold treasuries in taxable?
I'm in a similar situation (have a sizeable position of VCADX and a few MUB). There is of course a risk, but it's anyone's guess what will happen. Personally I don't think the federal government will allow municipalities to default en masse, since their services remain crucial. There are reasons why munis are considered to be second only to treasuries when it comes to safety. The current drop in value is probably partly caused by a lack of liquidity in the market. The funds continue to pay out tax-free dividends. I will hold.

If you feel you need to get out, I'd put the money in CDs (e.g. at Ally).

Scooter57
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Re: Munis getting slaughtered!

Post by Scooter57 » Sat Mar 21, 2020 3:40 pm

CIT is offering a better no penalty CD than Ally now. Just be aware they pull the money from your funding account immediately so it has to be in the funding account before you open it.

am
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Re: Munis getting slaughtered!

Post by am » Sat Mar 21, 2020 4:07 pm

ImmigrantSaver wrote:
Fri Mar 20, 2020 10:13 pm
VMLUX is performing much worse than I expected. Thinking of taking the loss and switching to VUSXX. It my house downpayment with flexible timeline money :annoyed

VVMLUX has been such a steady calm fund over the years I’ve followed. The interm, fund as well. But the recent losses, like yesterday of 2.5% are disappointing. It’s only during a crisis that all the hidden risks start showing up.

JackoC
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Re: Munis getting slaughtered!

Post by JackoC » Sat Mar 21, 2020 5:19 pm

am wrote:
Sat Mar 21, 2020 4:07 pm
ImmigrantSaver wrote:
Fri Mar 20, 2020 10:13 pm
VMLUX is performing much worse than I expected. Thinking of taking the loss and switching to VUSXX. It my house downpayment with flexible timeline money :annoyed
VVMLUX has been such a steady calm fund over the years I’ve followed. The interm, fund as well. But the recent losses, like yesterday of 2.5% are disappointing. It’s only during a crisis that all the hidden risks start showing up.
~5.1% price (not including interest income) loss YTD v 8.0% for VWIUX and 12.4% for the VTEB ETF (which includes a discount to NAV), per Yahoo Fiance chart. I agree, unsettling, not that anyone can say this was 'gteed' never to happen, but in the safer part of the portfolio a given erosion is more disturbing, to me anyway (my VMLUX holding is around 30% of 'safe' money, rest mainly savings accounts, CD's, TIPS/I-bonds). In terms of credit it somewhat makes sense that it hasn't done quite as much better than longer funds as duration would imply. The possibility of higher default rates is probably concentrated in relatively near term. The underlying muni curve is now inverted, see:
https://www.bloomberg.com/markets/rates ... t-bonds/us

At some point it's no longer a question 'high grade muni's have hardly ever defaulted', but rather you recognize this time could indeed be different. But, some defaults, and credit losses amounting to a large % of a fund are still quite different scenario's. Not even including the tax advantage 2 yr muni's per the page above (VMLUX is around 3 avg state mat IIRC) yield 2.80%, v the 2 yr note around 0.34%. (published SEC yld of the fund is completely out of date). That covers a fair amount of defaults, a lot by past muni stds, ~4%/yr (using traditional 40% recovery avg for corp bonds), 12% of issuers over a typical 3 yr bond's life, all in rough terms. Nobody knows the 'worst case' though, ever.

aarondearu
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Re: Munis getting slaughtered!

Post by aarondearu » Sat Mar 21, 2020 5:58 pm

When munis fell in 2011 what did you do? How about in 2013 or 2016 or 2018? Prices go up and prices go down. The average 10 year return of Vanguard intermediate muni fund going back to Feb 2001 is 4%. Tune out the noise.

2011: viewtopic.php?t=66744
2013: viewtopic.php?t=126737
2016: viewtopic.php?t=204436
2018: viewtopic.php?t=258828

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watchnerd
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Re: Munis getting slaughtered!

Post by watchnerd » Sat Mar 21, 2020 6:07 pm

aarondearu wrote:
Sat Mar 21, 2020 5:58 pm
When munis fell in 2011 what did you do? How about in 2013 or 2016 or 2018? Prices go up and prices go down. The average 10 year return of Vanguard intermediate muni fund going back to Feb 2001 is 4%. Tune out the noise.

2011: viewtopic.php?t=66744
2013: viewtopic.php?t=126737
2016: viewtopic.php?t=204436
2018: viewtopic.php?t=258828
I sold my last remaining bit of VWIUX on 1/6/20.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

ImmigrantSaver
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Re: Munis getting slaughtered!

Post by ImmigrantSaver » Mon Mar 23, 2020 9:57 am

JackoC wrote:
Sat Mar 21, 2020 5:19 pm
am wrote:
Sat Mar 21, 2020 4:07 pm
ImmigrantSaver wrote:
Fri Mar 20, 2020 10:13 pm
VMLUX is performing much worse than I expected. Thinking of taking the loss and switching to VUSXX. It my house downpayment with flexible timeline money :annoyed
VVMLUX has been such a steady calm fund over the years I’ve followed. The interm, fund as well. But the recent losses, like yesterday of 2.5% are disappointing. It’s only during a crisis that all the hidden risks start showing up.
~5.1% price (not including interest income) loss YTD v 8.0% for VWIUX and 12.4% for the VTEB ETF (which includes a discount to NAV), per Yahoo Fiance chart. I agree, unsettling, not that anyone can say this was 'gteed' never to happen, but in the safer part of the portfolio a given erosion is more disturbing, to me anyway (my VMLUX holding is around 30% of 'safe' money, rest mainly savings accounts, CD's, TIPS/I-bonds). In terms of credit it somewhat makes sense that it hasn't done quite as much better than longer funds as duration would imply. The possibility of higher default rates is probably concentrated in relatively near term. The underlying muni curve is now inverted, see:
https://www.bloomberg.com/markets/rates ... t-bonds/us

At some point it's no longer a question 'high grade muni's have hardly ever defaulted', but rather you recognize this time could indeed be different. But, some defaults, and credit losses amounting to a large % of a fund are still quite different scenario's. Not even including the tax advantage 2 yr muni's per the page above (VMLUX is around 3 avg state mat IIRC) yield 2.80%, v the 2 yr note around 0.34%. (published SEC yld of the fund is completely out of date). That covers a fair amount of defaults, a lot by past muni stds, ~4%/yr (using traditional 40% recovery avg for corp bonds), 12% of issuers over a typical 3 yr bond's life, all in rough terms. Nobody knows the 'worst case' though, ever.
It's about a third of my total FI (retirement, EF and house downpayment). I am considering just cutting the losses and exchanging it to treasury MM (VUSXX) :annoyed :confused

ImmigrantSaver
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Re: Munis getting slaughtered!

Post by ImmigrantSaver » Mon Mar 23, 2020 9:59 am

aarondearu wrote:
Sat Mar 21, 2020 5:58 pm
When munis fell in 2011 what did you do? How about in 2013 or 2016 or 2018? Prices go up and prices go down. The average 10 year return of Vanguard intermediate muni fund going back to Feb 2001 is 4%. Tune out the noise.

2011: viewtopic.php?t=66744
2013: viewtopic.php?t=126737
2016: viewtopic.php?t=204436
2018: viewtopic.php?t=258828
I didn't buy VMLUX until January 2019, mostly out of greed that my house downpayment money aren't earning much in the savings account, especially at my tax bracket. :oops:

am
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Re: Munis getting slaughtered!

Post by am » Mon Mar 23, 2020 10:40 am

MUB ishares national muni bond etf which likely correlated with Vang. Int muni fund is down .7% or so. Looks like more losses.

Is anyone cutting their losses and going into cash/cd or treasuries? On the one hand this feels like a rookie mistake, on the other hand, losing thousands from the “safe” part of the portfolio makes me want to cash out. Who knows how bad it will get if this goes on for months?

JD13
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Re: Munis getting slaughtered!

Post by JD13 » Mon Mar 23, 2020 10:50 am

birdog wrote:
Thu Mar 19, 2020 9:48 pm
I think illiquidity in the muni ETF market paired with crazy volatility and the nature of this economic pause is causing the big drop. I’m holding fast to VTEB. Once the economy is firing again and the panic abates, I anticipate a fairly robust recovery in muni’s. I HATE to sell at all time lows, which is what VTEB is at. Not gonna do it.
Same I have around 30% of my bond portofilio in VTEB. Waiting for the discount to disappear before I move to a mutual fund

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vitaflo
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Re: Munis getting slaughtered!

Post by vitaflo » Mon Mar 23, 2020 10:54 am

ImmigrantSaver wrote:
Fri Mar 20, 2020 10:13 pm
VMLUX is performing much worse than I expected. Thinking of taking the loss and switching to VUSXX. It my house downpayment with flexible timeline money :annoyed
I made the switch earlier last week. VMLUX has been my EF for many years, but with everything going on and MM's giving much higher yields than when I originally bought into VMLUX I figured it was time to make the switch now. Glad I did, got kinda lucky.

ImmigrantSaver
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Re: Munis getting slaughtered!

Post by ImmigrantSaver » Mon Mar 23, 2020 10:59 am

vitaflo wrote:
Mon Mar 23, 2020 10:54 am
ImmigrantSaver wrote:
Fri Mar 20, 2020 10:13 pm
VMLUX is performing much worse than I expected. Thinking of taking the loss and switching to VUSXX. It my house downpayment with flexible timeline money :annoyed
I made the switch earlier last week. VMLUX has been my EF for many years, but with everything going on and MM's giving much higher yields than when I originally bought into VMLUX I figured it was time to make the switch now. Glad I did, got kinda lucky.
Good for you! What MM fund did you switch into?

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watchnerd
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Re: Munis getting slaughtered!

Post by watchnerd » Mon Mar 23, 2020 11:01 am

am wrote:
Mon Mar 23, 2020 10:40 am
MUB ishares national muni bond etf which likely correlated with Vang. Int muni fund is down .7% or so. Looks like more losses.

Is anyone cutting their losses and going into cash/cd or treasuries? On the one hand this feels like a rookie mistake, on the other hand, losing thousands from the “safe” part of the portfolio makes me want to cash out. Who knows how bad it will get if this goes on for months?
All my fixed income is long Treasuries, short TIPS (VTIP), Treasury MM (VUSXX), CDs.

Even with the tax benefit, the spreads on munis aren't good enough to compensate for the risk, IMHO, and I don't need the income stream.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

CoastalWinds
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Re: Munis getting slaughtered!

Post by CoastalWinds » Mon Mar 23, 2020 11:02 am

I’m holding tight with VWIUX.

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vitaflo
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Re: Munis getting slaughtered!

Post by vitaflo » Mon Mar 23, 2020 11:10 am

ImmigrantSaver wrote:
Mon Mar 23, 2020 10:59 am
vitaflo wrote:
Mon Mar 23, 2020 10:54 am
ImmigrantSaver wrote:
Fri Mar 20, 2020 10:13 pm
VMLUX is performing much worse than I expected. Thinking of taking the loss and switching to VUSXX. It my house downpayment with flexible timeline money :annoyed
I made the switch earlier last week. VMLUX has been my EF for many years, but with everything going on and MM's giving much higher yields than when I originally bought into VMLUX I figured it was time to make the switch now. Glad I did, got kinda lucky.
Good for you! What MM fund did you switch into?
VMFXX. VUSXX has too high a minimum investment or I would have went with that.

sf_tech_saver
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Re: Munis getting slaughtered!

Post by sf_tech_saver » Mon Mar 23, 2020 11:37 am

VCLAX and VCADX are nearly 100% of my bond holdings. Its been a first-hand education to watch, but the bond ETFs have been hit much harder. I also had VTEB and thankfully had to sell that portion to pay my taxes last month.

I've certainly been reminded that munis are not great for crisis AA rebalancing--but I largely bought them for their tax-free cash flows which I can DCA back into the market every month. I'm more than willing to hold them forever and focus on these cash flows.

If even super long term high quality and broadly indexed muni-bond holders struggle we will have much bigger problems as a country.
VTI is a modern marvel

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mrspock
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Re: Munis getting slaughtered!

Post by mrspock » Mon Mar 23, 2020 11:50 am

VTEB is up 3% today... NAV spread has closed up to 3% vs 7-8% . Bodes well for mutual fund versions I think. Hang in there!

ImmigrantSaver
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Re: Munis getting slaughtered!

Post by ImmigrantSaver » Mon Mar 23, 2020 2:37 pm

mrspock wrote:
Mon Mar 23, 2020 11:50 am
VTEB is up 3% today... NAV spread has closed up to 3% vs 7-8% . Bodes well for mutual fund versions I think. Hang in there!
Wasn't it up on Friday too? And VMLUX was still down, so not sure how correlated they are.. :confused

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mrspock
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Re: Munis getting slaughtered!

Post by mrspock » Mon Mar 23, 2020 3:27 pm

ImmigrantSaver wrote:
Mon Mar 23, 2020 2:37 pm
mrspock wrote:
Mon Mar 23, 2020 11:50 am
VTEB is up 3% today... NAV spread has closed up to 3% vs 7-8% . Bodes well for mutual fund versions I think. Hang in there!
Wasn't it up on Friday too? And VMLUX was still down, so not sure how correlated they are.. :confused
It was up. I hold VWITX and VCAIX as well, and they seem to lag but more or less trend the same.

VTEB finished up 4.44%, biggest "up" day in a long time. Spread has almost closed up, now just 20c or 0.5%, what a difference a few days makes. Hard to know if this is because the Fed is finally buying up munis, standard spread/price arbitrage or interest rate direction speculation. Volume has still been 2x of normal, 3.54M shares vs. 1.74M shares on average.

MikeG62
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Re: Munis getting slaughtered!

Post by MikeG62 » Mon Mar 23, 2020 3:50 pm

Eno Deb wrote:
Sat Mar 21, 2020 9:47 am

...There is of course a risk, but it's anyone's guess what will happen. Personally I don't think the federal government will allow municipalities to default en masse, since their services remain crucial. There are reasons why munis are considered to be second only to treasuries when it comes to safety. The current drop in value is probably partly caused by a lack of liquidity in the market. The funds continue to pay out tax-free dividends. I will hold.
I share the same view.

If highly rated muni's default on a wide scale, one would have to wonder how those municipalities would ever raise funds again? Seems to me they will find a way to avoid a default one way or another.
Real Knowledge Comes Only From Experience

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birdog
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Re: Munis getting slaughtered!

Post by birdog » Mon Mar 23, 2020 3:55 pm

mrspock wrote:
Mon Mar 23, 2020 11:50 am
VTEB is up 3% today... NAV spread has closed up to 3% vs 7-8% . Bodes well for mutual fund versions I think. Hang in there!
Whew! Today felt good (VTEB)!

Hogan773
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Re: Munis getting slaughtered!

Post by Hogan773 » Mon Mar 23, 2020 5:35 pm

I'm not seeing the same numbers some of you guys are???? (the ones who keep saying the decline has been small)

I am looking at my VWIUX which was down again today by several percent. Looking at the NAV between the 52 week high and the low (which is amazingly between March 9 and March 20!) the decline is over 10 percent!

For the High Yield Tax Exempt VWALX, between March 2 and March 20 it is over 13% down!

This is when UST rates have basically been same range

The limited term tax exempt which has a very short duration is even down almost 7%

I'm not freaking out and selling, but I guess I have always focused on market rates in terms of USTs and lost focus on the widening of credit spreads that form the "real" discount rate for these bonds.

Rex23
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Re: Munis getting slaughtered!

Post by Rex23 » Mon Mar 23, 2020 6:21 pm

Hogan773 wrote:
Mon Mar 23, 2020 5:35 pm
I am looking at my VWIUX which was down again today by several percent.
those may have been Friday's numbers, today it should be +0.53% for VWIUX and +0.65% for VWLUX

Hogan773
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Re: Munis getting slaughtered!

Post by Hogan773 » Mon Mar 23, 2020 6:47 pm

Rex23 wrote:
Mon Mar 23, 2020 6:21 pm
Hogan773 wrote:
Mon Mar 23, 2020 5:35 pm
I am looking at my VWIUX which was down again today by several percent.
those may have been Friday's numbers, today it should be +0.53% for VWIUX and +0.65% for VWLUX
oops my bad, you are correct! I thought it had already updated for the day but I guess it was coming slowly

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