http://blogs.reuters.com/muniland/2012/10/31/munilands-flight-risk/ Bridges, budgets, bonds Fri, 17 May 2013 18:22:28 +0000 hourly 1 http://wordpress.org/?v=3.4.2 http://blogs.reuters.com/muniland/2012/10/31/munilands-flight-risk/comment-page-1/#comment-1933 Tschurin Mon, 05 Nov 2012 19:29:49 +0000 http://blogs.reuters.com/muniland/?p=12091#comment-1933 Cate, I don't think it's that simple. If your argument is that you are unlikely to find municipal bond funds in 401k's and other tax-deffered accounts, then you you also have to acknowledge that such tax-deferred accounts are where people are more likely to do "market timing." That means they are less likely to sell the muni funds in their taxable accounts, because they they might face taxes on their capital gains; and more likely to sell their treasury and corporate bond funds in their tax-deferred accounts, where they typically would face no capital gains tax consequence. The above suggests that muni's could have an advantage in terms of the stability of their shareholder base at a time of rising interest rates. Cate, I don’t think it’s that simple. If your argument is that you are unlikely to find municipal bond funds in 401k’s and other tax-deffered accounts, then you you also have to acknowledge that such tax-deferred accounts are where people are more likely to do “market timing.” That means they are less likely to sell the muni funds in their taxable accounts, because they they might face taxes on their capital gains; and more likely to sell their treasury and corporate bond funds in their tax-deferred accounts, where they typically would face no capital gains tax consequence. The above suggests that muni’s could have an advantage in terms of the stability of their shareholder base at a time of rising interest rates.

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