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MONEY SMALL INVESTOR INDEX: SMALL INVESTORS WIN WITH MUNI BONDS

 /ADVANCE/ NEW YORK, Feb. 21 /PRNewswire/ -- Tax-free municipal bonds rank as the best performing investment over the past year among the 10 major categories tracked weekly by MONEY magazine's Small Investor Index. And many analysts believe that the tax hikes President Clinton proposed in his speech to Congress last week will only magnify the muni boom.
 Over the past 12 months, municipals have returned 12.8 percent even before their tax benefits were counted. That's equivalent to a taxable 14.8 percent for an investor in the 28 percent federal bracket (couples earning $36,900 or more and single people making $22,100 or above in 1993).
 Taxable bonds came in second for the year, earning 11.7 percent. Among stocks, blue chips were up 7.5 percent, and small-company shares gained 4.8 percent.
 Anticipating Clinton's proposed income tax hikes, small investors have added $14 billion of fresh cash to municipal bond mutual funds since Thanksgiving, according to AMG Data Services in Arcata, Calif.
 Leading mutual fund companies report that the flood of money is increasing. "January was a record month for our muni funds," says Virginia Marans, spokeswoman at the Franklin Group of Funds. "And the pace has been even faster in February."
 Can muni bonds continue to shine? "The outlook is very positive," says Carolyn Dolan, managing director in charge of tax-sensitive investments at Offitbank in New York City. Ever since the 1986 tax law was passed, she notes, investors have flocked to municipal bonds as one of the last tax shelters. "President Clinton's plan to raise taxes will just reinforce that demand."
 Last week, the typical individual investor's portfolio fell $528 to $45,325. Stocks lost $623, while bonds gained $89. Certificates of deposit and money-market funds contributed $10.
 This Last Year % Change from a
 Week Week Ago Week Ago Year Ago
 100.60 101.77 94.65 -1.15% +6.29%
 Latest Changes for Each Asset
 % Change from a
 Category Index Week Ago Year Ago
 Stocks:
 NYSE 99.50 -3.47% +7.47%
 ASE/OTC 97.86 -4.80 +4.78
 Equity funds 99.32 -3.23 +3.93
 Bonds:
 Taxable bonds 102.92 +0.93 +11.71
 Municipals 103.52 +1.03 +12.76
 Bond funds 102.52 +0.52 +9.85
 Cash:
 CDs 100.49 +0.07 +4.03
 Money funds 100.35 +0.05 +3.02
 Other:
 Real estate 100.79 -0.47 -8.46
 Gold 108.15 -1.05 -9.32
 Jan. 1, 1993 equals 100
 Where Average Small Investors Have Their Money Now
 Current Year Ago Current Year Ago
 NYSE 22.97% 23.42% Bond funds 6.67% 5.37%
 ASE/OTC 7.25 7.40 CDs 14.42 17.06
 Equity funds 6.54 5.24 Money funds 24.53 23.07
 Taxable bonds 8.77 9.83 Real estate 0.82 0.77
 Municipals 7.51 7.28 Gold 0.51 0.54
 Sources: Bank Rate Monitor, the Federal Reserve, Investment Company Institute, Lehman Bros., Lipper Analytical Services, Merrill Lynch, Money Fund Report, Morgan Stanley Capital International, National Association of Real Estate Investment Trusts, Prudential Asset Management, Standard & Poor's, Robert Stanger & Co., World Gold Council.
 -0- 2/22/93
 /NOTE TO EDITORS: This material is also available in printable form from AP GraphicsNet and Access services for graphics and tables (under the file name MoneyIndex) and from PR Newswire for full text./
 /CONTACT: Jordan Goodman of MONEY, 212-522-3618, or Patti Straus of MONEY public relations, 212-522-2695/


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Date:Feb 19, 1993
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