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We take a look at this income market sell-off and review some of the key strategies investors can use to take the most advantage of it. Relying on static buy-under targets is ineffective and potentially dangerous during both systemic and idiosyncratic drawdowns. Effective risk management requires scenario analysis, diversification, and an 'All Weather' allocation approach rather than single-outcome bets.
The Fed just handed muni bond investors a rare pricing window, but the funds worth buying are not the ones most investors already own.
BlackRock MuniYield Quality Fund III, Inc. (NYSE: MYI - Get Free Report) crossed above its 200-day moving average during trading on Monday. The stock has a 200-day moving average of $10.98 and traded as high as $11.07. BlackRock MuniYield Quality Fund III shares last traded at $11.0150, with a volume of 166,729 shares trading hands.
BlackRock MuniYield Quality Fund III, Inc. (NYSE: MYI - Get Free Report)'s stock price crossed above its 200-day moving average during trading on Friday. The stock has a 200-day moving average of $10.95 and traded as high as $11.26. BlackRock MuniYield Quality Fund III shares last traded at $11.2350, with a volume of 177,729 shares
BlackRock MuniYield Quality Fund III, Inc. (NYSE: MYI - Get Free Report) passed above its 200-day moving average during trading on Friday. The stock has a 200-day moving average of $10.75 and traded as high as $10.93. BlackRock MuniYield Quality Fund III shares last traded at $10.91, with a volume of 119,139 shares trading hands.
Investment instruments should be used for their intended purposes; futures and options for capital excitement, Treasuries for income, and munis for tax-advantaged income. Municipal bonds (munis) offer tax-free income but come with credit risk, making diversification essential; building a personal diversified portfolio is costly and inefficient. Munis are attractive for those with a Federal income tax rate above 24%, providing better tax-equivalent yields despite higher risk and lower interest rates.
With the market at nosebleed valuations, where can we look for value and yield?
MYI is a Muni CEF managed by BlackRock with AUM over $800M. It pays a high 5.95% dividend tax free. MYI has a deep NAV Discount at 10.18%, which could be narrowed significantly with the recovery of Muni bond market. The current macro conditions and the strong summer seasonality favor Muni fund like MYI. It is a good time to buy MYI for income investors.