This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

No Muni Crisis Coming, Fund Manager Says

NEW YORK (TheStreet) -- Some states and towns are struggling financially, but their problems aren't so catastrophic that they will cause a wave of bond defaults, says John Boritzke, manager of the Marshall Intermediate Tax-Free Bond Fund (MITFX).

The $416 million mutual fund, which gets a full five stars from research firm Morningstar (MORN), has returned 1.7% over the past year, better than 89% of its peers. Over the past five years, the fund has returned an average of 4.5% annually, outperforming 99% of its Morningstar rivals.

Welcome to TheStreet.com's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks and views on the market in a five-question format.

Do you believe there's a muni crisis brewing in the U.S.?

Boritzke: Investors are selling their muni funds thinking there is a crisis coming, but we don't believe there is going to be a crisis in the truest sense of the word. If you can raise taxes or cut expenditures, then states and municipalities can deal with whatever fiscal problems they have.

Are the problems in the states similar to what we are seeing in peripheral Europe, the so-called PIIGS countries? Is California like Greece?

Boritzke: From the standpoint that they have a few fiscal issues to deal with, the answer is yes. But not to the same extent. The states and municipalities can fund themselves. They may have to pay more, but there is always a clearing rate in the market. And right now we are finding that clearing rate is a little higher in terms of yield than it was a few months back.

Is it a smart move to buy municipal bonds from resource-rich states? A lot of people are doing that with sovereign bonds, going to countries like Canada and Australia. Does it make sense to do that with the states as well?

Boritzke: You can. In fact, that's not a bad way to go. A resource-rich state would have the ability to promote its economy in order to get those resources out of the ground. It takes plants, equipment and people, which would be good for tax receipts. So that's not a bad way to play it.

What is the state of supply out there? Are states afraid to go to the market because of all the worries over state finances?

Boritzke: Supply is a little diminished right now simply because rates are higher and those issuers that want to take advantage of a stronger market are waiting a little bit. In general, there is a certain schedule of bonds that needs to get funded and will. It's just that rates are higher now. But we will get to a point where new supply represents a buying opportunity to the extent that we can identify what the clearing yield levels are for the market and that will give people some sense of confidence.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,122.01 +15.31 0.09%
S&P 500 2,000.12 +0.10 0.00%
NASDAQ 4,569.6210 -1.0160 -0.02%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs