Most fund managers agree that economically strapped Puerto Rico won’t drag down the entire municipal bond market. Neither will Chicago, which recently saw its debt downgraded by Moody’s below investment grade, according to Dawn Daggy-Mangerson, portfolio manager for the McDonnell Intermediate Municipal Bond fund. ‘Chicago’s problems will not affect the overall muni bond market but other states and municipalities within the nation are going to be facing similar issues and some are dealing better with it than others,’ said Daggy-Mangerson. ‘At McDonnell, we like to look at each credit from the bottom up and it’s pretty transparent which municipalities and states are going to deal with it better that others.’ The McDonnell Intermediate Municipal Bond fund is down almost 1% so far in 2015. The fund has a trailing 12 month yield of 1.3% and Daggy-Mangerson expects it to perform well in a Fed-tightening environment because they are more insulated from global interest rate risk.
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