Top High-Yield Municipal Fund Leads Market in 2024
This year has been a standout year for high-yield municipal bonds, with a spotlight on star money manager John Miller of First Eagle Investments. Since joining the firm in January after almost three decades at Nuveen, Miller has attracted nearly $4.4 billion into his First Eagle High Yield Municipal Fund in 2024, making it a standout performer in the high-yield space. In fact, the fund’s 11.4% return this year has outpaced all its peers and the Bloomberg Muni High-Yield Index, showcasing its success under Miller’s leadership.
Miller’s departure from Nuveen in 2023 marked the end of his tenure managing the largest junk muni fund, Nuveen’s $15.8 billion high-yield muni fund. While the Nuveen fund has seen outflows this year and returns that lag behind its peers, Miller’s success at First Eagle has been attributed to strategic decisions, such as underweighting tobacco bonds and Puerto Rico debt, two sectors that have underperformed this year due to underlying credit weaknesses.
Instead, Miller has focused on investments in real estate developments in Atlanta and Miami, as well as senior living sectors, diversifying the fund and positioning it for success. With investments in projects like Brightline Florida and Brightline West, Miller has seen substantial returns, further highlighting his solid track record.
Looking towards 2025, experts like Mikhail Foux of Barclays Plc caution that investors should manage their expectations for another strong year of returns for high-yield munis. However, Miller remains optimistic about the potential for further narrowing of spreads on high-yield munis, especially in light of the Federal Reserve’s projections to lower borrowing costs next year to support the US economy.
Overall, Miller’s success with the First Eagle High Yield Municipal Fund exemplifies the strength of his investment strategy and expertise in the high-yield muni market, solidifying his reputation as a top-performing money manager to watch in the industry.
