Taper Tantrum Memory Doesn’t Fade for MainStay Muni Fund Manager
- MainStay boosts cash in high-yield fund to twice normal range
- One-way market “makes for a very dangerous situation”
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MainStay Investments is increasing the percentage of cash held in its municipal bond mutual funds as a hedge against the risk of investor redemptions if the outperforming tax-exempt market turns.
It’s $2.7 billion high yield muni fund has raised its cash level to as much as twice its normal range for liquidity, said David Dowden, a managing director who helps oversee about $19 billion of local debt at Princeton, New Jersey-based MacKay Municipal Managers, the fund’s sub-adviser. The fund had about 9.6 percent of its portfolio in cash-equivalents as of April 30, the most in two years.