Tax-Exempts Suffer Biggest Monthly Drop This Year: Muni Credit
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Tax-exempt bonds had their worst monthly returns of 2010 as rising U.S. Treasury yields and record state and local fixed-rate debt sales sparked withdrawals from mutual funds investing in municipal securities.
Tax-free holdings lost 2.29 percent in November, the third consecutive monthly drop and the longest slide since 2004, according to the Bank of America Merrill Lynch Municipal Master Index, which accounts for price changes and interest income. Mutual funds investors pulled $5.4 billion of muni assets within two weeks last month, according to Lipper FMI, a research firm.