I think tax-free bond funds are mostly for people in the highest tax bracket, and if you are not paying taxes on AGI $250,000+ plus year after year, you should consider taxable bond funds.
I have been holding BBN for many years now, it is a fund of taxable municipal bonds with moderate leverage. I’ve been very happy with it, it pays 6.4% currently (taxable!) and has gone up 24%. Looking at its holdings, I just can’t see there being much default risk and I think it will rise further. I feel safe having a pretty large position in it.
The other bond fund I like is EMD, a lower quality/emerging market bond fund that pays 11.5% and has gone up 15% since I purchased it October 2015.
So this does not look like me bragging about winning with these bond funds, let me also say I have taken a bath on my largest individual position, VGK, the Vanguard Euro stock ETF. I am down 7% in it, and it would be higher if I had not averaged down. That’s even worse considering during the same period VOO (S&P 500) has done great. I also lost 90% of small position this year in in SunEdison, now bankrupt.
I don’t care about the loss in VGK, I think Western Europe large caps are crazy cheap and long overdue for a bull run, and pay decent dividends while I wait.
