RFMZ: Successful Swap, Remains An Interesting Choice

2025-04-29 19:33:54 ET

Summary

• RiverNorth Flexible Municipal Income Fund II (RFMZ) offers exposure to individual municipal bonds and muni bond-focused CEFs, managed by MacKay Shields and RiverNorth.
• The fund's high leverage and fees result in low net investment income, with performance needing to be driven by active management for potential capital gains.
• RFMZ trades at an attractive discount and has outperformed RiverNorth Managed Duration Municipal Income Fund (RMM), as we highlighted these two as swap candidates previously.

Written by Nick Ackerman, co-produced by Stanford Chemist

RiverNorth Flexible Municipal Income Fund II ( RFMZ ) is a closed-end fund that offers exposure to both individual underlying municipal bonds but also other muni bond-focused CEFs. The individual muni sleeve is managed by MacKay Shields, while the RiverNorth team invests in the muni CEF sleeve. They're a rather well-known CEF manager, bringing a lot of experience to investing in other funds. In that sense, you can essentially invest in a discounted fund that invests in other discounted CEFs, getting a discount on discounts. However, that also comes with the drawback of fees on fees, leading to what results in quite high expenses....

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