May 4, 2016 Comments (0) Blog

Bond Funds with the most Puerto Rico exposure

(Last Updated On: May 4, 2016)

The financial situation in Puerto Rico continues to get worse and the fallout will extend well beyond just direct debt issued by the island.  Many bond funds invested heavily in Puerto Rican debt because of Puerto Rico’s triple-exemption status (which means the income on its bonds are exempt from taxes at the federal, state and local levels).  According to reports, the following is a chart of the municipal bond funds with the greatest exposure:

Fund Ticker Category Puerto Rican exposure Total fund assets
Franklin Double Tax-Free Income A FPRTX High Yield Muni 44.72% $143.57M
Oppenheimer Rochester® MD Municipal A ORMDX Muni Single State Long 42.6% 48.65M
Oppenheimer Rochester® VA Municipal A ORVAX Muni Single State Long 39.29% 95.15M
Oppenheimer Rochester® Fund Municipals A RMUNX Muni New York Long 20.1% 5.6B
Oppenheimer Rochester® Ltd Term Muni A OPITX High Yield Muni 19.32% 2.0B
Oppenheimer Rochester® AZ Municipal A ORAZX Muni Single State Long 19.11% 43.69M
Oppenheimer Rochester® NJ Municipal A ONJAX Muni New Jersey 17.7% 396M
Oppenheimer Rochester® Michigan Muni A ORMIX Muni Single State Long 17.29% 43.08M
Oppenheimer Rochester® LtdTerm NY MunisA LTNYX Muni Single State Short 16.76% 2.7B
Oppenheimer Rochester® AMT-Free NY MuniA OPNYX Muni New York Long 16.29% 1.1B

The problem is so widespread that it was even discussed in a recent Last Week Tonight episode with John Oliver (https://www.youtube.com/watch?v=Tt-mpuR_QHQ).  Oliver’s main thesis (humorously conveyed of course) is how none of these funds would on their face appear to have anything to do with Puerto Rico.  For example, most novice investors would likely assume that the Oppenheimer Rochester Maryland fund would invest in Maryland and wouldn’t have more than 42% of its assets in Puerto Rican debt.

The White Law Group continues to investigate claims that brokerage firms failed to adequately disclose these concentrated positions before selling these municipal bond funds.

Before recommending an investment, financial advisors have a fiduciary duty to adequately disclose the risks involved in the investment and to perform the necessary due diligence to determine whether the investment is suitable for the investor. To the extent that an advisor or brokerage firm fails to perform adequate due diligence or makes unsuitable investment recommendations, the firm may be held liable for any resulting losses in a FINRA arbitration claim.

To determine whether you may be able to recover investment losses incurred in a municipal bond fund over-exposed to Puerto Rican debt, please contact The White Law Group at 1-888-637-5510 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida. For more information on the firm, visit www.WhiteSecuritiesLaw.com.