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SMMU vs. ETF Alternatives
The PIMCO Short Term Municipal Bond Strategy Fund is an actively managed exchange-traded fund (ETF). Designed to be appropriate for investors seeking tax-exempt income, the Fund consists of a diversified portfolio of primarily intermediate duration, high credit quality bonds, which carry interest income that is exempt from federal tax and in some cases state tax. With this Fund, investors will see the names of the bonds owned daily. In addition, the Fund will not use options, futures or swaps.
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Country: United States
- In Your Portfolio: Broad U.S. Bond ETFs, A Guide to Municipal Bond ETFs and Closed-End Funds
- Asset Class Performance: Bonds
Wednesday, Jun 263:34 PMWith today's gain, the iShares AMT-Free Muni Bond ETF (MUB +2.1%) has its biggest two-day rally since the financial crisis. but is still off more than 5% YTD. "We are taking advantage of this very opportunistic time," says Cumberland's David Kotok, reiterating a bullish stance he's had for a couple of weeks. "We see no more attractive alternatives." |Wednesday, Jun 263:34 PM| 3 Comments
Saturday, Jun 229:30 AMIt's "total capitulation" in fixed income (AGG, BND), says BAML's Michael Hartnett. The "blood bath" includes the largest-ever three-week rush of bond-fund redemptions, $2.6B leaving (2nd largest outflow ever) the Emerging Markets Bond ETF (EMB), and mortgage-backed securities (MBB), municipal bonds (MUB), and TIPS (TIP) funds each now showing net outflows for 2013. |Saturday, Jun 229:30 AM| 47 Comments
Sunday, Jun 161:56 AMDetroit has become the most populous city to default since Cleveland in 1978 after it missed a $39.7M debt payment on Friday. Overall, Detroit intends to suspend payments on $2B of unsecured debt as part of the plan of Emergency Manager Kevin Orr to turn around the city's horrific finances. Other measures include demanding that unsecured creditors accept a haircut of over 90%, and cutting pensions for active and retired workers. |Sunday, Jun 161:56 AM| 32 Comments
Friday, Jun 143:06 AMDetroit emergency manager Kevyn Orr is due to unveil his restructuring plan for the debt-laden city today to public labor unions, bondholders and bond insurers, including MBIA (MBI) and Assured Guaranty (AGO). Orr will reportedly try to persuade creditors to accept as little as 10 cents on the dollar for the city's debt. He has indicated that creditors would be far better off compromising now than taking their chances with a Chapter 9 bankruptcy filing. |Friday, Jun 143:06 AM| 15 Comments
Thursday, Jun 139:20 AMMunicipals (MUB) are a buy, writes David Kotok, noting an above-4% yield for very high-grade tax-free muni paper - a taxable equivalent yield above 7%. He suggests fixed-income markets (AGG, BND) have overreacted to the poor communication policies of central banks. "We are now lengthening duration ... If the market wants to give us bargains, our job is to take them." Some closed end muni funds at discounts to NAV: NIO, NVG, BTT, NPM, NRK, MUC, VCV, NEA. |Thursday, Jun 139:20 AM| Comment!
Thursday, Jun 135:22 AMU.S. states are expected to end their fiscal year on June 30 with a combined surplus of $23.7B after taking in stronger-than-expected revenues. However, the future is more uncertain, as income this year may have been boosted by residents selling assets ahead of a tax rise. Going forward, states will also have to cope with federal spending cuts, an expansion of Medicaid, and increasing pension and retirement obligations. |Thursday, Jun 135:22 AM| Comment!
Wednesday, Jun 125:31 AMIllinois had to pay a premium on the sale of a $600M 10-year sales-tax backed bond yesterday, with the yield of 2.94% 0.75 percentage point higher than triple-A-rated debt on a benchmark scale. The auction came after Fitch and Moody's downgraded Illinois last week due to its inability to address its growing unfunded pension liabilities. Next week, the state legislature is scheduled to hold a special session over the crisis, while in two weeks, Illinois is due to auction a $1.25B bond. |Wednesday, Jun 125:31 AM| Comment!
Tuesday, Jun 112:48 AMDetroit has a 50/50 chance of filing for bankruptcy, Emergency Manager Kevyn Orr told a packed public meeting yesterday. Orr is due to meet with over 100 creditors, union leaders and bond insurers on Friday, when he'll detail his plan to overhaul the city's finances. Detroit's liabilities are estimated at $17B and it has a deficit of $386M, but it has enough cash on hand to see it through Q4 at least. |Tuesday, Jun 112:48 AM| Comment!
Wednesday, Jun 54:42 AMJefferson County in Alabama has reached a deal with its creditors that paves the way for it to exit bankruptcy in what has been the largest municipal failure in U.S. history. Under the agreement, debt-holders will receive $1.84B out of the $2.4B that they hold, with JPMorgan (JPM), the largest creditor, to take a haircut of $842M. With a number of other local governments in distress, the case is being closely watched. |Wednesday, Jun 54:42 AM| 4 Comments
Tuesday, Jun 44:16 AMDetroit emergency manager Kevyn Orr intends to ask the city's unions and creditors for concessions as part of a restructuring plan for its $17B of liabilities. It's unclear whether the plan would avert bankruptcy or be used as a basis for a court supervised reorganization. Detroit has a $30M debt payment due on June 15, but Orr could reportedly decide not to make it. |Tuesday, Jun 44:16 AM| 1 Comment
Monday, Jun 34:20 PMAnother Pimco income fund trading at a premium to NAV gets hit - today the Pimco California Municipal Income Fund II (PCK -4.9%). Today's decline still leaves it at a 12% premium to the end of May's NAV at a time when the average muni CEF is trading at discount. Three noteworthy ones: NUV, NPM, MQY. |Monday, Jun 34:20 PM| Comment!
Monday, May 2012:30 PMThe hot market for corporate junk (HYG, JNK) has pushed the yield on high-yield corporates (4.88%) well below that of high-yield municipals (5.22% nominally, over 8% on a tax-equivalent basis). The nominal spread of 34 bps is down from 56 bps a week ago as investors take notice of the anomaly. High-yield muni ETFs: HYD, HYMB, XMPT. |Monday, May 2012:30 PM| 4 Comments
Friday, May 173:55 PMThe bear market in gold (GLD, IAU) has left three closed-end funds trading at abnormally large discounts to NAV, says Morningstar's Cara Esser: GTU, CEF, and PHYS. Likewise, a small selloff in municipal (MUB) paper has left these muni CEFs at attractive values: NXR, MYD, NXP. |Friday, May 173:55 PM| 2 Comments
Tuesday, May 79:39 PMWhile fears of widespread defaults in the municipal bond (MUB) market (perpetuated in December of 2010 by Meredith Whitney) have so far proven overblown, Moody's says a disturbing trend seems to be developing. Although only five defaults were recorded in 2012, that's more than four times the average yearly rate logged from 1970 to 2007. Perhaps the most notable thing about last year's five defaults: three of them were general government defaults as opposed to defaults on bonds tied to specific projects. The historical average for general government muni defaults: 1 every 4.3 years. |Tuesday, May 79:39 PM| 4 Comments
Tuesday, Apr 239:29 AMForecasts of "Armageddon" for the the municipal bond market (MUB) are terribly misguided, writes Randall Forsyth. Higher rates? Variable rate financing is only a small fraction of the market, and any increase would come from rock-bottom levels. Recent bankruptcies? They get a lot of headlines, but last year accounted for just 1% of all obligations. This year, just 0.6%. |Tuesday, Apr 239:29 AM| Comment!
Tuesday, Apr 235:53 AMSan Bernardino's council has passed a budget that will allow the bankrupt Californian city to restart $1.2M in biweekly employer contributions to Calpers while continuing to renege on its commitments to its other creditors, including bondholders. Along with Stockton, San Bernardino represents a test case over who should get paid first when a municipality goes bankrupt - the public employees or the bondholders. (previous) |Tuesday, Apr 235:53 AM| 4 Comments