Despite dire warnings of imminent government collapse, since the middle of 2009, only three municipal issues in the “safe” sectors--general obligation, tax backed and essential services—have defaulted, according to Municipal Market Advisor’s data.

But with money fleeing municipal funds--investors yanked $2.9 billion last week, according to Lipper,  and $15.2 billion over the past six weeks — the biggest outflow over any six-week period ever, your clients may be asking you if they should hold tight. Or see the flight as an opportunity and buy.

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