Investors may think that when they buy a bond, it’s their’s until maturity. Unfortunately, bonds with high yields can be “called” or repaid before they mature, leaving the investor with cash and unattractive choices for reinvestment. There are some ways to maintain interest income – either by choosing a bond of lower credit quality or a longer maturity – but these come at the cost of added risk.
Barnet Sherman, director and portfolio manager of the TIAA-CREF Tax-Exempt Bond Fund, is a regular contributor to the Intelligent Investing series on forbes.com. In his latest post, Barnet provides some insight into how municipal bond portfolio managers can reinvest when high yielding bonds get called away. For more about this topic read the column on forbes.com.
Funds that invest in fixed income municipal securities are not guaranteed and are subject to interest rate, inflation, and credit risks.
You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 877 518-9161, or go to www.tiaa-cref.org for a current prospectus that contains this and other information. Please read the prospectus carefully before investing.
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