attempts to calm municipal bond investors in the aftermath of the Detroit bankruptcy case in his latest syndicated column
, which appeared in The Seattle Times
A lot of individual investors may be tempted to pull out of municipal bond funds, but they don't need to be worried, Jaffe writes, because higher-quality focused PMs have anticipated it. For example, Jaffe said, most muni fund managers balance essential-purpose bonds with general obligation bonds to prevent funds from being hurt by bankruptcy.
Jaffe spoke to Christopher Keith
, a PM managing bond portfolios at Advisers Investments
, who, unsurprisingly, defended muni bonds as a safe investment and said that most PMs have had ample time to plan ahead. Jaffe quotes Keith as saying, "Despite this and other highly publicized pockets of trouble, municipal bonds remain a safe, low-risk and conservative asset class."
Jaffe argues that the other municipalities facing revenue shortfalls will use the negative fallout to push for regulatory and legislative change rather than move towards bankruptcy.
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