BSE - Is It Time To Consider Muni Closed-End Funds?

• A sharp sell-off to start the year has pushed down municipal bond valuations and muni closed-end funds to discounts, presenting an attractive entry point for investors seeking tax-exempt income.
• Muni CEFs borrow money at short-term interest rates and invest the proceeds in muni bonds that pay higher yields, increasing earnings of the fund and supporting higher distributions relative to a muni bond or mutual fund.
• Because muni CEFs borrow at short-term interest rates and typically invest in muni bonds with longer maturities, a flatter yield curve (i.e. narrower spread) could negatively impact the earnings of a leveraged CEF.

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