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mutual fund outflows

Municipal Bond News

Week 6, 2011 Municipal Bond and Mutual Funds News – More Municipal bond outflows

municipal bonds

This week (February 4, 2011 – February 11, 2011) saw continued media coverage and now some government hearings on the Municipal bond crisis. Mostly unchanged, but a down week for FCSTX, FSTFX, VCAIX but more bad news for the municipal bond market dominates the headlines. This weeks municipal bond news included:

  • Hearings on Capitol Hill with regard to the state and municipal debt crisis. Clearly this problem area is getting much more attention to prevent major blow up. (WSJ)
  • Scenarios for avoiding a municipal bond crisis.  A reminder that, California and Illinois are in the worst shape. (WSJ)
  • The Super Bowl was entertaining but an NFL player strike would hurt Stadium municipal bonds. (Daily finance)
  • 30 year treasury bond yields have broken out of their 30 year trend line, a traitor signal that the long bull market in treasuries may be ending someday or that traders believe the Fed is not handling inflation jitters in a timely manner. (WSJ)

Vanguard Municipal Bond Mutual Fund Weekly Price Movement

Vanguard tax-exempt California Money Market fund (VCTXX) is yielding 0.13% – Down 0.02% for the week.

Vanguard Short Term Tax-Exempt Fund (VWSTX) 0.0% for the week.
Month to date: -0.0%. December 2010 -0.14%. Current Yield 0.85%.

Average maturity 1.3 years – Average Duration: 1.2 Years – Average Credit quality: AA. Exp Ratio: 0.20%, 0.12% Admiral shares. Morningstar Rating: 3 Star

Vanguard Limited Term Tax-Exempt Fund (VMLTX) 0.0% for the week.
Month to date: -0.20%. December 2010 -0.43%. Current Yield 1.51%.

Average maturity 2.7 years – Average Duration: 2.4 Years – Average Credit quality: AA. Exp Ratio: 0.20%, 0.12% Admiral shares. Morningstar Rating: 4 Star

Vanguard Intermediate Term Tax-Exempt Fund (VWIUX) -0.07% for the week. Month to date: -1.2%. December -1.53%. Current Yield 3.46%.

Average maturity 6.7 years. Average duration 5.8 years. Average credit quality AA. Expense ratio 0.20%, 0.12% Admiral shares. Morningstar rating 5 stars.

Vanguard California Intermediate term municipal bond fund (VCAIX) -0.09% for the week. Month to date: -1.19%. December -1.69%. Current Yield 3.64%.

Average maturity 6.3 years. Average duration 5.8 years. Average credit quality A. Expense ratio 0.20%, 0.12% Admiral shares. Morningstar rating 4 stars.

Fidelity Municipal Bond Mutual Fund Weekly Price Movement

Fidelity Short-Intermediate Muni Income Bond Fund (FSTFX) -0.09% for the week.
Month to date: -0.46%. December 2010 -0.63%. Current Yield 1.78%.

Average maturity 3.4 years – Average Duration: 2.7 Years – Average Credit quality: A. Exp Ratio: 0.50% Morningstar Rating: 4 Star

Fidelity California Intermediate term municipal bond fund (FCSTX) -0.19% for the week.
Month to date: -0.56%. December 2010 -0.64%. Current Yield 1.84%.

Average maturity 3.3 years. Average duration 3.1 years. Average credit quality A. Expense ratio 0.35%. Morningstar rating 4 stars.

See how the Fidelity intermediate term municipal bond fund (FCSTX) and Vanguard California intermediate term municipal bond fund (VCAIX) performed this week on this graph:

See how the municipal bond mutual funds we listed above performed this month on this graph:

Municipal Bond Mutual Fund News

Week 5, 2011 Municipal Bond and Mutual Funds News – More Municipal bond outflows

municipal bonds

This week (January 28 – February 4, 2011) saw continued media coverage of the Municipal bond crisis. Net mutual fund redemptions totaled $2.7 billion in the seven days that ended Jan. 26, down from $5.7 billion the previous week but still the 12th straight week of net withdrawals. Mostly unchanged, but a down week for FSTFX, VCAIX but more bad news for the municipal bond market dominates the headlines. This weeks municipal bond news included:

  • State governors strongly oppose bankruptcy protection changes. (Bond Buyer)
  • State tax revenue is growing, but it won’t bridge budget gaps (WSJ)
  • Are Muni bonds fears overblown? (WSJ)
  • Muni bond yields rise and prices fall. (LA Times)

Vanguard Municipal Bond Mutual Fund Weekly Price Movement

Vanguard tax-exempt California Money Market fund (VCTXX) is yielding 0.15% – Up 0.02% for the week.

Vanguard Short Term Tax-Exempt Fund (VWSTX) 0.0% for the week.
Month to date: -0.0%. December 2010 -0.14%. Current Yield 0.85%.

Average maturity 1.3 years – Average Duration: 1.2 Years – Average Credit quality: AA. Exp Ratio: 0.20%, 0.12% Admiral shares. Morningstar Rating: 3 Star

Vanguard Limited Term Tax-Exempt Fund (VMLTX) 0.0% for the week.
Month to date: -0.20%. December 2010 -0.43%. Current Yield 1.50%.

Average maturity 2.7 years – Average Duration: 2.4 Years – Average Credit quality: AA. Exp Ratio: 0.20%, 0.12% Admiral shares. Morningstar Rating: 4 Star

Vanguard Intermediate Term Tax-Exempt Fund (VWIUX) 0.0% for the week. Month to date: -1%. December -1.53%. Current Yield 3.43%.

Average maturity 6.7 years. Average duration 5.8 years. Average credit quality AA. Expense ratio 0.20%, 0.12% Admiral shares. Morningstar rating 5 stars.

Vanguard California Intermediate term municipal bond fund (VCAIX) -0.09% for the week. Month to date: -1.19%. December -1.69%. Current Yield 3.64%.

Average maturity 6.3 years. Average duration 5.8 years. Average credit quality A. Expense ratio 0.20%, 0.12% Admiral shares. Morningstar rating 4 stars.

Fidelity Municipal Bond Mutual Fund Weekly Price Movement

Fidelity Short-Intermediate Muni Income Bond Fund (FSTFX) -0.09% for the week.
Month to date: -0.46%. December 2010 -0.63%. Current Yield 1.75%.

Average maturity 3.4 years – Average Duration: 2.7 Years – Average Credit quality: A. Exp Ratio: 0.50% Morningstar Rating: 4 Star

Fidelity California Intermediate term municipal bond fund (FCSTX) 0.0% for the week.
Month to date: -0.37%. December 2010 -0.64%. Current Yield 1.83%.

Average maturity 3.3 years. Average duration 3.1 years. Average credit quality A. Expense ratio 0.35%. Morningstar rating 4 stars.

See how the Fidelity intermediate term municipal bond fund (FCSTX) and Vanguard California intermediate term municipal bond fund (VCAIX) performed this week on this graph:

See how the municipal bond mutual funds we listed above performed this month on this graph:

Municipal Bond Mutual Fund News

Week 3, 2011 Municipal Bond and Mutual Funds News – More municipal bond mutual fund outflows

municipal bonds

This week (January 17-21, 2011) saw some calm and even an up week for Vanguard’s VCAIX, but more outflows from the muni mutual fund market. This weeks municipal bond news included:

  • Mutual funds lost $29 billion in outflows during the last nine weeks. $478 billion is the total size of the municipal bond mutual fund industry. Clearly Meridith Whitney has helped scare individual investors. (Bond buyer)
  • Vallejo California is submitting a plan to exit bankruptcy. Some creditors will no doubt challenge it, but the judge may force them to accept the city’s plan or risk no payment. (WSJ)
  • A law professor argues that to prevent bailouts, the bankruptcy law should be amended to allow states to file bankruptcy. This would allow the state to terminate pricey union contracts, reduce its bond debt, restructure  the ‘Cadillac’ pension benefits. (WSJ)
  • The mayors of Los Angeles and Chicago said that financial strains may cause cities to default on their municipal bonds. (Bloomberg)
  • Blame Bernanke for most of the losses in a municipal bond market. 30 year treasury bond yields have jumped to nearly 4.6% since August 2010, a 30% rise. Thirty-year AAA rated municipal bond index has seen yield surged to 5%, a 36% increase.  The additional increase is probably due to worsening state and local budgets, credit risk, and elimination of the build America bond program. Make sure you understand the average duration of your mutual fund. (WSJ)
  • The yield on a low rated 10 year California general obligation bond is up to 4.72%. Top rated 10 year Muni bonds now yield 3.42%.

Municipal Bond Mutual Fund Weekly Price Movement

Vanguard tax-exempt California Money Market fund (VCTXX) is yielding 0.12% – Unchanged for the week.

Vanguard Short Term Tax-Exempt Fund (VWSTX) 0.0% for the week.
Month to date: -0.0%. December 2010 -0.14%. Current Yield 0.84%.

Average maturity 1.3 years – Average Duration: 1.2 Years – Average Credit quality: AA. Exp Ratio: 0.20% Morningstar Rating: 3 Star

Fidelity Short-Intermediate Muni Income Bond Fund (FSTFX) 0.0% for the week.
Month to date: -0.37%. December 2010 -0.63%. Current Yield 1.7%.

Average maturity years – Average Duration: 2.7 Years – Average Credit quality: AA-. Exp Ratio: 0.50% Morningstar Rating: 4 Star

Fidelity California Intermediate term municipal bond fund (FCSTX) -0.09% for the week.
Month to date: -0.37%. December 2010 -0.64%. Current Yield 1.79%.

Average maturity 3.3 years. Average duration 3.1 years. Average credit quality AA. Expense ratio 0.35%. Morningstar rating 4 stars.

Vanguard California Intermediate term municipal bond fund (VCAIX) 0.28% for the week. Month to date: -1.49% December -1.69%. Current Yield 3.58%.

Average maturity 6.3 years. Average duration 5.8 years. Average credit quality A. Expense ratio 0.20%. Morningstar rating 4 stars.

See how the Fidelity intermediate term municipal bond fund (FCSTX) and Vanguard California intermediate term municipal bond fund (VCAIX) performed this week on this graph:

See how the municipal bond mutual funds we listed above performed this month on this graph: