December 2, 2016 Comments (0) Blog

Nuveen California High Yield Municipal Bond Fund Investment Losses

(Last Updated On: December 7, 2016)

Are you concerned about your losses investing in Nuveen California High Yield Municipal Bond Fund? If so, The White Law Group may be able to help.

The recent rise in interest rates is having an effect on the bond market. The 10-year U.S. Treasury yield jumped 53 basis points, ending the month at 2.37%. This sent bond prices diving.

In addition,  a huge supply of new muni bonds were issued in October, as state and local governments rushed to fund projects ahead of what they expected to be a volatile market after the election.

Funds that invest in long-term bonds with the shakiest credit have been hit hardest. One example, long-term California municipal bonds, are down 6.6%, including reinvested interest, since the July low in interest rates. High-yield munis are down 6.1% the same period.

Nuveen California High Yield Municipal Bond (NCHRX), an $800 million long-term fund that has lost 9.71% since rates started rising. The institutional fund charges 0.65% in expenses and has an average effective duration of 10.56 years, according to Morningstar.

According to the Nuveen website, The Fund invests primarily in municipal bonds that pay interest exempt from regular federal and California personal income tax.* The portfolio seeks to identify “below investment grade” or “medium to lower rated”, high-yielding municipal bonds that offer attractive value in terms of current yields, prices, credit quality, liquidity and future prospects. The Fund opportunistically employs leverage through the use of inverse floating rate securities issued in tender option bond transactions to try to enhance yield and duration.

Here are the latest Average Annual Total Returns – A Shares as of date: 11/30/2016 For Nuveen California High Yield Municipal Bond Fund:

 

  With
Sales Charge
Without
Sales Charge
YTD – 12/05/2016 -6.94% -2.90%
1 Month -10.69% -6.79%
3 Month -12.50% -8.69%
6 Month -10.31% -6.34%
1 Year -4.51% -0.31%
3 Year 6.37% 7.89%
5 Year 7.03% 7.96%
10 Year 3.65% 4.10%
Since Inception 4.06% 4.49%

 

For more information on The White Law Group’s investigation of municipal bonds, see Muni Bonds Sinking as Rates are Rising.

Municipal bonds used to be one of the safest investments that a financial advisor could recommend to a client, and were often utilized by retired investors looking for a safe way to generate income in retirement.  Unfortunately, the heyday of muni bonds appears over and any financial advisor not adequately disclosing the risks of municipal bonds is doing so negligently.  There is simply too much information out there in the media and too many negative warning signs for a financial advisor to continue to tout these investments as super low risk.

The foregoing information has been provided by The White Law Group.  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 White Law Group visit http://www.whitesecuritieslaw.com.  For a free consultation with a securities attorney, please call the firm’s Chicago office at 888-637-5510.