[pascalxus]

Thanks for the explanation.

Do you see the same kind of risk problems in the muni bond space? For instance: PZA, MLN, FCAVX all show that they're 100% investment grade. Are these among the funds that are actually more risky than they appear?

What's your opinion on CEF Muni bond funds like: MYD, IIM, VGM, NVG, NAD, MHI. I know they're relatively risky but should do fine as long as the world isn't completely falling apart. I've seen some professionals say the credit markets are kind of binary. When things are good, they're always going up. And when things get really bad, everyone wants to sell at once. is this true of muni bonds as well?

[trailrunner46]

The closed end funds can be tricky if yields start to rise as the leverage they use gets more expensive. Frankly I am not much of a muni expert so hard for me to speak about munis specifically. In general though bond investors are worried about the binary default scenario, they are either getting paid over time or all the sudden not. However its important to keep in mind what kind of bond is being considered... an IG highly rated company has a large fixed income/duration component and then is at the mercy of the market pricing of the spread from government to corporate (widens when things look riskier, which means the bond price will fall). High Yield companies have less duration to worry about as a % of the return, its much more about the risk of the company (get paid for a while while the company is operating fine, but can get wiped out in a downturn).