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It wasn’t an astute catch on my part, more along the lines of basic due-diligence. I was trying to answer the question: “How are they paying that kind of a dividend in these market conditions?” The tiniest bit of digging discovered why. That doesn’t mean there might not be some good bargains in the closed-end bond funds. In fact, I truly believe there has to be. There are hundreds and hundreds of the funds, some of which have to be doing worthwhile things but, nonetheless, are being tarred with the same brush being applied to everyone else. “Interest-rates are going up”, as everyone supposedly knows. But we’ve been hearing that story for two years now and still nothing dramatic has happened. Obviously, eventually, rates will rise, just as, eventually, they fall again. That’s what rates and prices do. They go up and down. So one’s choices are obvious. Make a forecast and live by that forecast, or admit that one can’t know and put a judicious amount of money to work as one can or is inclined.

A good example of possible bargains is the muni funds. The sell-off began last fall for reasons that are absolutely sound. The issuers spent beyond their means and then spent a bit more, as becomes evident in the linked paper from Wells Fargo on state-budget shortfalls.

Should investors flee munis? That depends on why one is investing and how risk-tolerant one is. But, for sure, there comes a point when the price is low enough to justify the risks, particularly if one is buying across a basket of bonds, either directly or through a fund. To put the matter another way, what kinds of yields are corporates offering right now compared to munis? Or, vice versa, what kinds of yields are munis offering compared to corporates of comparable risk and maturity? E.g., take a look at some of the double-AA, insured GO's. To my admittedly-inexperienced eye, the credit-spreads relative to corporates are wide enough to be attractive, and I’ve been nibbling. Also, I’ve been trying to learn the bond-fund game well enough so that when the market does blow up, I’ll have my shopping-list ready.

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