COLUMNISTS A number of “strategies” that failed in the most recent credit crisis have been given traditional Viking funerals, with the bodies of portfolio managers’ careers going up in flames on their long ships, or long positions. By now, for example, the securitising of subprime mortgages is reviled from central Asian yurts to the floors of European parliaments.
However, some are coming back. Take the US municipal bond carry game. The American muni market was for the longest time the most mom-and-pop end of the investing business: tax-advantaged interest income from conservative issuers to pay for the retirements of the country’s savers. Flows in this market had the consistency of road tar. Because the interest rates were low – in recent years about 85 per cent of the US Treasury curve – they did not have the appeal of high returns to offset the low liquidity.
