One criteria the managers weigh heavily: How easy it will be to sell a bond if they want to change course. Recently, the strong demand for high-yield debt -- and the diminished pace of new borrowing -- has made the market more liquid, they said.
Returns are also being buttressed by the improving finances of state and local governments, which stands in contrast to the high-profile collapse of Puerto Rico. The Caribbean island’s long-building strains haven’t affected the broader market because investors recognize that its problems are unique.
“You didn’t see the contagion in this market that you may have seen in others,” said Burger. “Most municipal credit is improving, and we look for bonds that have better credit characteristics.”