Puerto Rico is being dubbed “America’s Greece.” The island has too much debt that it can’t pay.

The fallout: So who gets hurt if Puerto Rico doesn't pay up -- or if it only pays back a fraction of what it owes? It could be you.

A lot of regular Americans hold these bonds.
If you have a 401K, you’re probably exposed to these bond losses!

Puerto Rico’s bonds have also been demoted to “junk” status.

Over 20% of bond mutual funds own Puerto Rican bonds, according to data from Morningstar
(the exact numbers are 377 funds out of 1,884 United States bond mutual funds).


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Right now, hedge funds hold about $15 billion in Puerto Rican debt, mutual bond funds hold another $11 billion or so, and individuals hold the rest.

Among the funds that hold Puerto Rican debt, some of the largest are run by Oppenheimer Funds and Franklin Templeton.
For example, the Franklin Double Tax-Free Income Fund (FPRIX) holds nearly half of its investments in Puerto Rican bonds.

The biggest fund at stake is Franklin’s $229 million Double Tax-Free Income Fund, or FPRTX, which directs 47 percent of its assets to commonwealth securities.
That’s the largest allocation among muni mutual funds, according to Morningstar.

Numerous Oppenheimer Rochester municipal funds hold 15% or more of the fund in Puerto Rican bonds, including the Oppenheimer Rochester MD Municipal Fund (ORMDX)
Oppenheimer held $4.6 billion of Puerto Rico securities, about 17 percent of its assets, as of April, according to Morningstar.

Franklin held $2.3 billion—for a 3 percent allocation to Puerto Rico—as of April.

As part of your strategy, know your exposure and where your money is!
Request a free strategy review here: Adrian.Rowles@devere-group.com 


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Link to CNN Money: Who owns Puerto Rico’s debt?

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