Chicago Munis Will Recover With Economy Says Wells Fargo Fund Manager

The recent lack of movement in Treasury yields has caused municipal bond fund prices to stagnate. A growing economy should lift the muni market in the second half of 2015, said Lyle Fitterer, portfolio manager for the Wells Fargo Advantage Municipal Bond fund. 'You have a little bit of income, a little bit of price depreciation in the marketplace,' said Fitterer. 'Longer term it looks pretty attractive on a relative value basis so we are looking for slightly positive returns by the end of the year.' The Wells Fargo Advantage Municipal Bond fund, which has a trailing twelve month yield of 2.7%, is up 6 basis points so far in 2015, according to fund-tracker Morningstar. The $3.2 billion fund has returned 5.5% on an annualized basis over the past five years, better than 89% of its Morningstar peers. While Puerto Rico’s financial problems are capturing headlines, Fitterer said the island’s troubles are not weighing on the national muni market. In fact, he said Chicago and New Jersey’s problematic paper are having more of an impact than Puerto Rico. 'A lot of people have had a chance to sell Puerto Rico,' said Fitterer. 'I think most people think it’s cheap and they buy it and then it gets cheaper. We think it’s too hard to analyze.' Fitterer said his team does not immediately run from municipalities with legacy pension issues, instead taking each bond on a case by case basis.