Advisors Jon M. Larsen and Owen Murray are also telling clients to stand pat. Larsen, a portfolio manager at Albion Financial Group in Salt Lake City, offers clients the option of substituting a portion of their muni holdings with dividend paying stocks.
"While municipals still offer more stability," says Larsen, "with careful selection a client may have a greater after-tax yield with dividend stocks, coupled with the additional benefit of a buffer from some of the uneasiness found in the municipal market today."
"The trouble in the muni market is a lively topic among many of our clients. Our advice is to stay put and stop worrying," says Murray, a CFA and director of research at Horizon Advisors LLC in Houston. "We feel that a meltdown in the muni market is very unlikely, and that the recent pressure on prices is more of an opportunity than a source for concern."
Meanwhile, Rezny Wealth Management, headquartered in Naperville, Ill., is advising clients to avoid long-term muni bond holdings, but not sell out of muni positions entirely, according to Brian C. Rezny, the firm's president. He expects interest rates will rise over the next several years.
At the other extreme is Ted Feight, owner of Creative Financial Design, with offices in Lansing, Portage and Southfield, Mich., who has pulled clients out of all bond holdings, except those that come due this year, citing the likelihood interest rates will rise.
Bruce W. Fraser, a financial writer in New York, is a frequent contributor to Financial Advisor. He is writing a book on millionaires. You may contact him at [email protected]. His web site is www.bwfraser.com.