Ameriprise tells clients to sell OppenheimerFunds municipal-bond funds holding Puerto Rico debt

Ameriprise tells clients to sell OppenheimerFunds municipal-bond funds holding Puerto Rico debt
Oppenheimer has about $3.5 billion in Puerto Rican debt spread across 19 funds, according to Morningstar.
DEC 05, 2016
Ameriprise Financial is telling clients to sell OppenheimerFunds municipal bond funds with big holdings of Puerto Rican debt, adding to the chorus of critics of the funds' holdings. Five of the Oppenheimer Rochester single-state muni funds have more than 30% of their portfolios invested in Puerto Rican debt. The commonwealth has more than $70 billion in muni debt, and defaulted on nearly half of $2 billion due July 1. Oppenheimer has about $3.5 billion in Puerto Rican debt spread across 19 funds, according to Morningstar. The big stake in Puerto Rico debt prompted Ameriprise senior analyst Jeffrey Lindell to warn clients about the funds, according to Bloomberg. “As Puerto Rico bond defaults accelerate, the mutual funds may have to cut dividend rates as bond interest payments are missed,” Mr. Lindell wrote. “The net asset value of the mutual funds could also be volatile as the price of Puerto Rico bonds reacts to speculation and news, or as potential principal haircuts occur.” Interest from Puerto Rico's obligations is free from state and federal taxes in all states, which explains their presence in many state-specific muni funds. But OppenheimerFunds' outsized stake in Puerto Rico has been getting raspberries from other analysts as well. Oppenheimer Rochester Virginia Municipal (ORVAX), Oppenheimer Rochester Pennsylvania Municipal (OVPAX) and Oppenheimer Rochester Maryland Municipal (ORMDX) all get two stars from Standard and Poor's, a negative rating. All have more than 35% of their portfolios in Puerto Rico, according to Morningstar; Oppenheimer Rochester Maryland Municipal has 45% of its assets in the commonwealth. Two other funds laden with Puerto Rico's paper, Oppenheimer Rochester North Carolina Municipal (OPNCX) and Oppenheimer Rochester Arizona Municipal (ORAZX) get a neutral rating of three stars from S&P. Morningstar gives Oppenheimer's Maryland fund one star out of five for its three-year record, a negative rating. It awards three stars, however, to Oppenheimer's Virginia offering and four stars to Oppenheimer's Pennsylvania fund. The Maryland offering ranks in the 93rd percentile in its category, the Virginia fund ranks in the 68th percentile, and the Pennsylvania fund ranks in the 25th percentile.

Latest News

Revealed: The InvestmentNews Top Advisors for 2025
Revealed: The InvestmentNews Top Advisors for 2025

Driven by long-term vision and a steadfast commitment to client service, the top-ranking advisors are reaching new heights of success.

Trepidation at SEC as Trump workforce overhaul casts shadow on agency
Trepidation at SEC as Trump workforce overhaul casts shadow on agency

While the regulator's lawyers may be exempt, a federal effort to purge workers is causing uncertainty across its broader employee base.

Prime Capital Financial, Carnegie expand Eastern footprints
Prime Capital Financial, Carnegie expand Eastern footprints

The two national RIA firms are bolstering their presence separately in Georgia and Connecticut with new billion-dollar acquisitions.

Embattled TD Bank eyes $14B raise in Schwab stake exit
Embattled TD Bank eyes $14B raise in Schwab stake exit

The banking giant is looking to sell its interest in the online brokerage giant amid the continuing fallout of its historic money-laundering settlement with federal regulators.

Next-gen woman advisor managing $200M switches from UBS to Sanctuary Wealth
Next-gen woman advisor managing $200M switches from UBS to Sanctuary Wealth

Advisor joins the Partnered Independence model for new firm launch.

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.

SPONSORED Why wealth advisors should care about the future of federal tax policy

Blue Vault features expert strategies to harness for maximum client advantage.