John Flahive, director of fixed income at BNY Mellon Wealth Management, said he’s considering closing the company’s Municipal Opportunities Fund (MOTIX) to new investors as tax-free yields fall to 11-month lows.
“A lot of the opportunities have been washed away in the last month and a half,” said Flahive, who helps oversee $22 billion in munis from Boston. “There really isn’t much out there.”
The $3.7 trillion municipal market has surged 6.2 percent this year, the strongest start since 2009 and a bigger return than stocks, Treasuries and corporate bonds, according to Bank of America Merrill Lynch data. Benchmark 10-year muni yields fell today to 2.29 percent, the lowest since June, joining an advance across fixed-income assets amid bets on increased monetary accommodation in Europe.
A slowdown in bond sales by states and localities has fueled this year’s rally as demand overwhelms supply. The governments have issued about $91 billion of long-term debt through May 9, the slowest to start a year since 2011, according to data compiled by Bloomberg.
Flahive said he needs board approval and other internal signoffs before shutting the fund, which has about $961 million in assets and has a mandate to maximize total return. Top holdings include Maryland general obligations and North Texas Tollway Authority bonds.
The original target size for the fund was about $1 billion, Flahive said. It has gained 6.7 percent in 2014, and has beaten 83 percent of its peers over the past five years.