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Muni Funds Dominate August Upgrades List

Municipal funds received the most upgrades in the month, while international closed-end funds saw the most downgrades from Ratings.
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Municipal closed-end funds received the largest number of upgrades from Ratings during the month of August, while the once-stellar sector of international funds received the largest number of downgrades in the same time frame.

Seven of the top 10 upgrades were assigned to municipals funds, either national or single state. Municipals' tax-free status and relative safety in relation to the market's recent chaos are obvious lures for investors seeking a safe haven in this volatile time.

In line with the bull run in the Treasury market, which was sparked by a flight to safety, municipals look set to continue to attract investment dollars even if prices are driven up to levels at which yields on these securities compress markedly.

On the other side of the spectrum are the international closed-end funds, which dominate the downgrades list. Seven out of the ten 10 downgrades for August were dished out to funds exposed to Israel, Europe, Australia, Korea, Eastern Europe and Asia Pacific.

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Sam Patel, CFA, is the manager of mutual fund research for the Ratings.

In keeping with TSC's Investment Policy, employees of Ratings with access to pre-publication ratings data must pre-clear any potential trade through the legal department, and are prohibited from trading any security that is the subject of an unpublished rating revision until the second business day after the rating is published.

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