No. of Recommendations: 1
I've been kicking around the idea of buying some closed-end bond funds. Particularly a small amount of junk, and a larger amount of a good muni.

At first blush, it would seem that the run up would be even more of a concern for junk funds with regard to individual issues. Unlike the individual investor, junk funds need to keep their money at work. They can't afford to just hunker down and wait for value, and they need it in bigger increments. The little guy has the "luxuries" of not having too much money under his control, no mandate to invest it, and no mandate to invest it in a certain security class.

Some closed-end junk funds have some pretty tempting yields in the high teens. But, the risk seems high (always is, I suppose), and has likely been amplified by the recovery in asset values. Is it too late to take advantage of the bond market crash through funds? It seems so. On the other hand, the funds did their buying in the trough, presumably. So, you're really buying the existing port. Sifting through those that are trading at an NAV discount and haven't recovered share price as much may reveal some worth looking into further. Right now, the muni market looks better to me with a lot of NYS funds yielding 6.5% to 7.5% tax free. I may have to pass on the junk. At least for now.
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