Muni Fund Rollercoaster Ride May Not Be Over

The Bond Buyer reports:

The recent bout of panic selling by investors in municipal bond funds reflects several factors, including headline risk due to predictions of widespread defaults, rising interest rates, the extension of the Bush-era tax cuts, and rallying equities.

As these events became the focus of investor attention late last year, the $464.6 billion muni fund industry was hit with an unprecedented wave of selling.

"The panic peaked in the middle and latter part of January, and that's evidenced by the muni mutual fund outflows," said Michael Crow, portfolio manager and senior municipal credit analyst at Glenmede Investment Management in Philadelphia.

The saga continues.