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First Investors Tax-Exempt Funds: Impact of Hurricanes Harvey and Irma

  • Sep 20, 2017

By: Clark Wagner, President, Foresters Investment Management Company, Inc. and Chief Investment Officer, Foresters Financial and Patrick Tucci, co-Portfolio Manager, First Investors Tax Exempt Funds

As the entire nation watched, Texas and Florida were recently battered by recordbreaking winds and inundated with floodwaters that stretched for miles inland, the result of back-to-back hurricanes Harvey and Irma. 

Here at Foresters Financial, our thoughts are with all of the residents, families, and communities in the areas affected, whether by power loss, displacement from their homes or jobs, or loss of either. Clients with investments through the First Investors Tax Exempt Funds in these impacted locations, can rest assured that these investments are being monitored carefully now and as the recovery progresses. 

Despite the vastness of the affected zones, most First Investors Tax-Exempt Funds’ holdings in Florida and Texas are not geographically located within the affected areas. The Funds do have some exposure but we believe that the likelihood of a debt service payment disruption on the bonds we hold is minimal. 

In particular, the Funds do hold some bonds geographically located in the greater Houston area—such as Houston Utility System (Aa2/ AA rated). As of this writing, the First Investors Funds Team is diligently working to assess any impact. The total exposure to Houston Utility System is less than 1% in the Tax Exempt Income Fund and less than 2% in the Tax Exempt Opportunities Fund. We do not expect any negative long-term impact. All other bonds held by the Funds in the affected Texas regions are either insured or have a credit enhancement. This means that a bond guarantee program is in place to pay any deficiency caused by the default of a bond participant affected by the hurricane. During the next several days, we expect to be able to reach the appropriate parties in the affected areas to obtain more clarity. 

In Florida, First Investors Tax Exempt Income Fund and First Investors Tax Exempt Opportunities Fund each holds bonds for both Fort Lauderdale and Fort Myers airports (this represents less than 2% of each fund). Both airports were shuttered during the most severe period of the storms. Subsequently, Fort Lauderdale resumed flights on Tuesday (9/12/2017) and Fort Myers on Wednesday (9/13/2017). Disruption to revenue supporting the bonds is expected to be minimal.


These views represent the opinions of the Portfolio Managers and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the close of business on September 14, 2017 based on the information available at the time and are subject to change at any time market or other conditions. We disclaim any responsibility to update such views.

All investing involves risk, including possible loss of principal. Fixed income investing includes interest rate risk and credit risk. Interest rate risk is the risk that bonds will decrease in value as interest rates rise. As a general matter, longer-term bonds fluctuate more than shorter-term bonds in reaction to changes in interest rates. Credit risk is the risk that bonds will decline in value as the result of a decline in the credit rating of the bonds or the economy as a whole, or that the issuer will be unable to pay interest and/or principal when due. There are also special risks associated with investing in certain types of bonds, including liquidity risk and prepayment and extension risk.

For more information about First Investors Funds from Foresters Financial Services, Inc., you may obtain a free prospectus by calling 800 524 2803 or visiting our website at You should consider the investment objectives, risks, charges and expenses of the funds carefully before investing. The prospectus contains this and other information about the funds, and should be read carefully before you invest or send money. An investment in these funds is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. First Investors Funds are managed by Foresters Investment Management Company, Inc. and distributed by Foresters Financial Services Inc.; each is a wholly owned subsidiary of Foresters Financial Holding Company, Inc.

Foresters Financial™ and Foresters™ are the trade names and trademarks of The Independent Order of Foresters, a fraternal benefit society, 789 Don Mills Road, Toronto, Canada M3C 1T9 and its subsidiaries, including Foresters Financial Holding Company, Inc. (FFHC)


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