Taxable Managers Finding Value in Munis
Taxable bond managers have taken advantage of the recently exposed values in the muni market, says Franklin Templeton's Rafael Costas.
Miriam Sjoblom: The last couple of months have shown us that you don't need a rise in defaults for municipal bond funds to lose money, and whether part of that was Treasury-yield-related or in part it was due to outflows, I think liquidity is a big issue for the municipal bond market and for fund shareholders. Can you talk a bit about how your portfolio managers are dealing with liquidity?
Rafael Costas: Sure, it's been very challenging as you can imagine. But we also lived through a period like this not much longer than two years ago with a panic of '08 when we and the rest of the world essentially were going through the same kind of crisis in terms of people hiding away from investments and just essentially buying Treasuries and gold. So, we have recent experience, and it's not the first time that our portfolio managers have gone through a recession or a sell-off period. So, we do a lot of the same things.