Puerto Rico’s problems are not systemic and will stay within Puerto Rico unless retail investors overreact, said Julio Bonillo, portfolio manager for the Schroder Broad Tax-Aware Bond Fund. ‘If they react negatively and start to pull money out of their municipal bond funds, from our perspective, that’s an opportunity to get into the muni space,’ said Bonillo. ‘If they don’t overreact, which is what we’ve seen, that’s great.’ The Schroder Broad Tax-Aware Bond Fund has returned 4.6% in the past year and pays a 3% dividend, according to fund-tracker Morningstar. Bonillo has avoided Puerto Rico bonds, but he does own some Chicago municipal bonds, despite the city’s recent credit downgrade by Moody’s to below investment grade. The difference between the troubled municipalities, according to Bonillo, is that Chicago has a thriving economy even though it is experiencing fiscal turmoil due to pension problems while Puerto Rico is experiencing a ‘brain drain’ which will hold its economy back.
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