2022-06-06
19:00:36.984 GMT
By Skylar Woodhouse
(Bloomberg) -- Nuveen Chief Investment Officer Saira Malik
says it is “time to test the waters again” in the $4 trillion
municipal-bond market as demand for the battered asset class
turns a page after a months-long exodus of cash.
The Bloomberg municipal-debt index gained 1.5% in May --
its best monthly performance since November 2020 -- paring this
year’s losses to 7.3% as policy tightening by the Federal
Reserve has led to a selloff in bonds.
“Of course, one month of performance doesn’t make a trend,
and munis are still down sharply year to date. But we think the
worst of the damage wrought by soaring yields and Fed policy
uncertainty may be behind us,” Malik wrote in a note published
Monday.
Municipal-bond funds pulled in $1.2 billion in the week
ended Wednesday, according to Refinitiv Lipper US Fund Flows
data, as the monthly advance likely gave a boost of confidence
to retail buyers. The inflow, the biggest since November,
snapped a 15-week stretch of withdrawals that exceeded $60
billion.
“Negative flows have been the primary driver of today’s
cheaper municipal bond valuations, which could represent an
attractive entry point for those willing to dip their toe back
into the muni waters,” Malik said.
Nuveen’s flagship $19 billion high-yield municipal bond
fund reopened to new investors June 1 after an eight-month
close, according to a filing with the US Securities and Exchange
Commission. High-yield securities have been hit especially hard
by the rout, and funds focused on risky state and local debt
have seen outflows. Since Nuveen announced in August 2021 that
the fund would close to new investors the following month, the
fund’s assets have dropped by about $5 billion.
To contact the reporter on this story:
Skylar Woodhouse in New York at swoodhouse15@bloomberg.net
To contact the editors responsible for this story:
Amanda Albright at aalbright4@bloomberg.net
Jennifer Bissell-Linsk, Mark Tannenbaum