September 16, 2019 BARRON’S 31
MutualFunds
TalkingWithJohnMillerand
TimRyan,Co-Managers,
NuveenStrategicMunicipal
OpportunitiesFund
Digging
Deepfor
Value
ByLewisBraham
INVESTING IN THE MANY MUNICIPAL
bonds that finance mundane things like
the local sewage-treatment plant can
often require more expertise than
buying headline-grabbing hot stocks
like Facebook or Amazon.com.
With more than 55,000 active muni
issuers in the marketplace, John Miller,
a co-manager of theNuveen Strategic
Municipal Opportunitiesfund (ticker:
NSAOX), has plenty of work to do.
“These issuers might have several
different bond deals outstanding at any
given point in time,” Miller says. “So,
the total number of individual muni
bonds is approaching two million.” An
average bond issuance size is just $25
million, he notes. That means research-
ing individual bonds can be challenging.
Miller and his co-manager, Tim
Ryan, both have more than 25 years’
experience doing just that. (Ryan also
has worked structuring bond deals for
municipalities to raise funds.) As the
co-head of fixed income at Nuveen
Asset Management, Miller oversees a
25-member muni-bond analyst team.
That deep bench has helped Strategic
Municipal Opportunities beat 97% of its
peers in Morningstar’s Muni National
Long category in the past three years.
Since the fund’s December 2014 incep-
tion through August of this year, it has
delivered a 5.7% annualized return,
versus just 3.7% for the S&P Municipal
Bond Index. (The fund charges a 3%
front-end load on its A shares.)
While Nuveen manages several
muni-bond funds, this is the shop’s
most flexible one and thus represents
the two managers’ best ideas. Miller
and Ryan launched the fund based on
requests from financial advisors who
were tired of funds restricted to a
specific credit quality or bond maturity
and wanted more active management.
One unusual area this fund has
profitably ventured into is distressed
bonds, such as those of electric utility
FirstEnergy’s (FE) subsidiary FirstEn-
ergy Solutions. The bonds are tax-free
municipals because they finance emis-
sion scrubbers and waste disposal at the
company’s nuclear- and coal-power
plants—and the state of Ohio wants to
protect citizens from toxic emissions.
FirstEnergy’s subsidiary suffered
from competition with gas-powered
utilities and filed for chapter 11 bank-
ruptcy in March 2018, around when
PhotographbyAlexaViscius
TimRyan,left,andJohnMiller