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Tobacco bonds fueling NAV rise
Q
I own two high-yield, tax-exempt muni funds with Oppenheimer (no load) and Vanguard. I have these for yield, but have noticed that the Oppenheimer fund chart shows a steady growth in NAV while Vanguard fund is flat (which is what I would expect). Why would such a fund have a growth curve in NAV?
A
James A. Klotz responds:
You are happier with your Oppenheimer Rochester Fund for the same reason our clients are pleased with us – tobacco settlement bonds.
Due to the outstanding performance of these securities, Ronald Fielding, the Oppenheimer fund manager, has been the No. 1 manager in the high-yield sector for the last three, five and 10 years.
The tobacco bonds have shown tremendous appreciation since 2003. Many of these issues have been refinanced, handsomely rewarding bondholders. (Enter “tobacco bonds” in the search function at the top of this Web page for more detailed information regarding these securities).
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