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Morningstar, Inc. Commentaries

Where to Look for Cheap Muni Funds

May 30, 2014
Click here to access Where to Look for Cheap Muni Funds

As a whole, municipal-bond closed-end funds are not screaming bargains at current valuations, but they look fairly cheap on a relative basis. As of May 27, the average muni CEF traded at a 5.6% discount, which was wider than the 3.4% average discount for the sector over the past 16.5 years (as far back as Morningstar data goes). Even after omitting the hot muni market of January 2010 onward, muni CEFs look slightly cheaper than average: These funds traded at an average discount of 3.9% for the 13-year period ended December 2009. That market environment was also less favorable for leveraged muni funds, as higher short-term interest rates made leverage financing more expensive.

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Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individuals, financial advisors, and institutions.

Morningstar provides data on more than 385,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 8 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services and has approximately $195 billion in assets under advisement or management as of Sept. 30, 2012. We have operations in 27 countries.