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Kass Katch: Buy Closed-End Munis

Stocks in this article: VPVNQUETXBTTBKN

Toward that end, I have bought a package of closed-end municipal bond funds (I have no favorite), including: VPV, Invesco Trust for Investment Grade Municipals (VGM), Invesco California Value Municipal Income Trust (VCV), Nuveen Quality Income Municipal Fund (NQU), Nuveen Select Quality Municipal Fund (NQS), Nuveen Premium Income Municipal Fund II (NPM), Nuveen Premium Income Municipal Fund (NPI), Nuveen Municipal Market Opportunity Fund (NMO), Nuveen Municipal Advantage Fund (NMA), Nuveen Dividend Advantage Municipal Fund (NAD), Eaton Vance Municipal Income Term Trust (ETX), BlackRock Municipal Target Term Trust (BTT) and BlackRock Investment Quality Municipal Trust (BKN).

My current intention is to treat this package of bonds as an investment, though a short-term trade (January to February) to the upside is quite likely.

I plan to keep my package of closed-end municipal bond funds for the next two to three years. I remain confident that the bonds will likely outperform (on an absolute and risk-adjusted basis) the S&P 500 over that time frame.


This column originally appeared on Real Money Pro at 8:46 a.m. EST on Dec. 17.

At the time of publication, Kass and/or his funds were long VPV, VGM, VCV, NQU, NQS, NPM, NPI, NMO, NMA, NAD, ETX, BTT and BKN, although holdings can change at any time.

Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.

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