My understanding is that with tax exempt minis, the very rich in the top brackets will bid them up to risk adjusted parity given their high bracket, so unless your taxable income is also extremely high, you are better off avoiding tax exempt munis.
I’ve been in BBN since 10/2013 and my average price is 0.3% less than the current price.
“I don’t know. I don’t think even if someone were able to buy into BBN right now, that they would be looking at the great returns it did have from the past decade. Thoughts?”
The scenario where BBN does really well is (1) no major wave of muni defaults not covered by bond insurance (2) rates drift down in the USA toward the savings glut/demographic decline levels in Western Europe and Japan.
I happen to think both of these will be the case.
For #1, in the depths of the recent recession muni defaults were still extremely low. Historically, they are much lower than corporate. There is a bias in the ratings agencies in how they rate the two groups. Munis rated “B” have a default rate 90% lower than corporates with the same rating.
(Puerto Rico is a unique situation and near default. BBN does not own any PR bonds at all.)
For #2, here’s bloomberg’s page showing major economy 10-year bond rates:
