Municipal Bond Fund Collapse Exposes Dangers of Junk Debt
A construction worker while renovating a road in the Union Market district in Washington.
Photographer: Al Drago/BloombergBrian Katz was at his son’s college graduation from Northwestern University in June when he got a text from his financial adviser saying they needed to talk. A few days later the adviser told Katz that the municipal bond fund he put money in since 2022 had suffered major losses.
Katz’s stake in the open-end Easterly Funds’ RocMuni High Income Municipal Bond Fund tumbled 50% in two days, a stunning move in the staid world of municipal bonds, an asset class that tends to provide steady returns.