In just five months, junk muni fund zooms from zero to $1B

investmentnews.com:

John Miller’s new high-yield municipal-bond fund has amassed $1 billion of assets in just under five months, drawing buyers eager to invest in the riskiest segment of state and local-government debt.

Miller joined First Eagle Investments in January after nearly three decades at Nuveen, where he built up what is still the largest high-yield muni fund, a market behemoth with a high-risk, high-return strategy that remains among the market’s top performers.

“We believe the fund’s popularity with investors is attributable to our disciplined investment approach, rigorous credit analysis and attractive income profile,” Miller said in a statement on Monday about his First Eagle fund.

The $1 billion level marks a major milestone for Miller, 57, after he left Nuveen in June. That was two months after the New York-based asset manager settled a years-long legal battle with Preston Hollow Community Capital, a lender that accused Miller of seeking to blackball it on Wall Street.

Market-wide, high-yield muni funds have gained $5.7 billion this year, according to LSEG Lipper Global Fund Flows data. Miller’s First Eagle fund started with about $130 million of assets at the beginning of the year after it was converted from a corporate-bond strategy, meaning that it saw investments grow roughly eightfold. Meanwhile, assets in Nuveen’s flagship high-yield fund are at $16.1 billion as of May 8, according to the firm. That’s up from $15.8 billion at year end.

“We always welcome increased market participation as it is in the best interests of investors and the industry,” Sally Lyden, a Nuveen spokesperson, said in a statement.

The First Eagle portfolio includes some of Miller’s favorite credits. The two biggest positions are securities issued