Prediction Disputed

By then, investors including Bill Gross, who runs the world's biggest bond at Pacific Investment Management Co. in Newport Beach, California, were publicly disputing Whitney's prediction. In April, McDonnell Investment's Ciccarone said municipal-cash figures showed Whitney was on the wrong track.

The market has rebounded as the wave of defaults she predicted failed to materialize. The benchmark iShares S&P National AMT-Free Bond Fund, with a $2.17 billion market valuation, has had a total return of 7.2 percent since Whitney's "60 Minutes" appearance, according to data compiled by Bloomberg.

"She's been a tremendous marketing tool for us because she's been out there challenging the industry," said Anson Clough, managing director of fixed income at Appleton Partners Inc. in Boston, which oversees $4.4 billion of assets.

"That's why we invest in municipal bonds -- municipalities have the ability to get through this," he said. "They have that taxing power."

 

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