Personal Investments • Short term to intermediate repositioning.

I have a lot of short term treasuries maturing the next few months in my taxable account. Looking for a bond fund or CEF that will pay around short term rates but also offer potential capital gains when rates drop. I already have a lot of money in Nuveen NZF muni CEF which I have held a few years and I like, this CEF should perform well on any rate cuts. I understand and am happy with the risk involved in leverage muni funds/CEF's. I was thinking of putting some more into NZF and the rest into VWALX so my muni's would be 50% in each and offering a current blended yield of 6% and a good chance of some upside. Any thoughts on this approach and any other options I am missing? Tax free 6% income with some growth and the option to sell and buy equities on a major market drop seems like a good thing.

Personally I would not speculate on leveraged munis because you think rates are going down. Rates could certainly go up instead

Why not just use unleveraged munis?

Not enough yield for me. Most leveraged muni CEF's have already raised their dividends this year with rate stabilizing and will do so again if and when they drop. I would expect the leverage to work as a positive in a lowering rate scenario, I personally have found dripping leveraged muni's works very well for building up a large tax free income stream. My thoughts are to go 50% leveraged and 50% unleveraged to blend at 6%.

I have to ask the obvious question, if this was such a good way to get great yields why wouldn't everyone be doing it?

Statistics: Posted by whiterabbit66 — Tue Mar 05, 2024 6:01 pm — Replies 6 — Views 347