FREQUENTLY ASKED QUESTIONS:
Q:
Is this strategy difficult to manage?
A:
Our municipal bond fund investment service is easy to understand and
easy to implement (see the Benefits
and Getting Started pages).
Q:
How many positions will be in my portfolio?
A:
We recommend minimum of 3 positions in a portfolio, but how many you
choose is up to you. At any point in time, there may be a
few as zero positions that have a "BUY" signal (all in cash) up to a maximum
of 12 positions. Where there are no funds that have a "BUY" signal it
indicates that our model has identified muni bond funds as overpriced compared
to historical levels.
Q:
How do I subscribe?
A:
Please see our “Subscribe”
page that presents you with subscription options, discounts, and our money-back
guarantee.
Q:
How do I get started using the MuniFund investment service?
A:
Please see our “Getting Started”
page that walks you through the investment process, step by step.
Q:
When and how to trade MuniFund Investor's recommendations?
A:
Our MuniFund Investor model is run after the close of the US stock market
and the Members section of the website is updated before the market opens for
trading the following day. Members are notified by e-mail when
there is a change in a position (do not forget to verify that you can
receive e-mails from MuniFund Investor by using
the e-mail verification feature from your personal profile). Please
see also How will I know what to trade?
Q:
Do you use stop losses for drawdown protection?
A:
Yes, unlike many other strategies, downside protection is built into
our system: we set a 4.5% stop loss from the buy price for all positions and
recommend a 4.5% trailing stop if your broker offers that option. We notify
subscribers via e-mail if a position stops out.
Q:
Can I buy/hold fewer than 3 positions?
A:
Yes, you can hold as many or as few positions as you like.
The positions are managed independently. We recommend
a minimum position size of $10,000 per position to minimize the impact of your
broker’s trading commissions. The lower your broker's commissions, the
less impact on the value of your portfolio.
Q:
Which funds do you use?
A:
We analyze over 140 national closed-end municipal bond funds on a continuous
basis and recommend only those that are in the top 10%.
Q:
Why do you use closed-end funds?
A:
Due to their unique structure closed-end funds often trade at discount
to their net asset value (NAV) enabling investors to purchase them at prices
below the aggregate value of the municipal bonds held in the fund.
This provides an additional opportunity for price appreciation and can
also provide additional downside protection.
Q:
Can your service be used with municipal bond mutual funds?
A:
Mutual funds typically have short-term redemption fees which would negatively
impact the performance. Furthermore, our service exploits discrepancies
in the discounts to net asset value that are only associated with closed end
funds.
Q:
Will my returns be tax-free?
A:
The dividends from the municipal bond funds in your portfolio will be
tax-free, however any gains that result from selling a fund will be taxable.
This means that your total return will be tax-advantaged, i.e. taxed
at a lower rate than a typical taxable investment.
Q:
How active is your strategy? How many trades will
I need to make per month?
A:
If you have a 3 position portfolio, you will typically need to make 1-3
trades per month.
Q:
How will I know what to trade?
A:
Our subscribers receive e-mail notifications that indicate the ticker
symbol, the action (buy or sell) and the recommended limit price for each trade.
This information is also posted on the Members section of our website.
Q: What is a municipal
bond?
A:
Municipal bonds are tax-advantaged fixed income securities that are issued by
state and local governments to finance municipal projects such as the building
and repair of roads, bridges, and tunnels; school and hospital construction;
and other projects around cities and towns.
Q: What is a municipal
bond fund?
A:
A municipal bond fund is a professionally managed fund that holds individual
municipal bonds and also typically buys insurance to protect against the potential
for default for the bonds that it holds.
Q: What is a closed-end
fund?
A:
A closed-end fund is similar to a mutual fund in that it is a collection
of individual investments held together and managed as a portfolio.
Shares in the fund are then sold to shareholders. The
key difference is that a closed-end fund has a fixed number of shares and the
price of the shares varies by both the demand for the fund and the changes in
value of the investments held in the fund.
Q:
How do you choose the municipal bond funds that you recommend?
A:
We use a proprietary fundamental and technical screen that takes into
account such factors as dividend growth, long-term appreciation, discount to
net asset value, relative strength, and a variety of other factors.
Q:
Why not just buy and hold municipal bond funds?
A:
In October 2008, the average principal loss for a municipal bond fund
was -15%!
Q:
How do you avoid wash sales?
A:
In the event that a position in a particular fund incurs a loss at sale,
we recommend that you not re-purchase that fund for 30 days.
If you have a question that we have not answered here please feel free to send
an e-mail to info@munifundinvestor.com
with your query.