You’ve heard this before. Federal Reserve Chairwoman Janet Yellen said Wednesday the central bank may raise its benchmark interest rate in December. Then again, it may not.

Many money managers aren’t waiting to see how the rate-hike soap opera turns out. They’re already buying mutual funds, ETFs and individual securities they like, regardless of when — or even whether — the Fed raises rates.

“The Fed often misses signs,” said Ken Graves, managing partner and chief investment officer of Capital Research Advisors. He does not want to base portfolio decisions on such a faulty track record, he adds.

High-yield municipal bonds are among his favorites. He boosted his stake in April, when many sold off. He buys them for clients in high-yield mutual funds from Putnam, Oppenheimer Rochester, Western Asset, Prudential and Invesco.

“The spreads over Treasuries are huge,” he said. “And munis have a default rate that is 1% of corporates. Also, our yield from them is 0.5% a month.” That makes them ideal for income-hungry investors.
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