In our latest monthly "profile", Money Fund Intelligence interviews Mathew Kiselak, portfolio manager of the top-ranked Evergreen Institutional Municipal Money Market Fund. We excerpt some of his comments below. Kiselak says, "On the VRDN front, there's good and bad news. The good news is that only a small percentage of VRDNs are backed by monoline insurers. The majority are backed by bank letters of credit. Some of these banks are having issues, but we're not really seeing a series of downgrades, so they're all eligible. However, even at 5% of the marketplace, it's a supply that we need."

The Evergreen manager continues, "We're not buying insured VRDNs currently because there is continued uncertainty about liquidity, and we don't want to run the risk of losing the put option. On the other hand, with synthetic floaters or TOBs, we have more flexibility in what we require with regards to drop-away provisions. We've always looked at underlying collateral, but it's paramount now."

Finally, we ask Kiselak, "Is there a threat of anyone breaking the buck?" He says, "We've structured the portfolio to stand on its own without monoline insurance. In this day and age, most large mutual fund companies have a seasoned in-house credit research staff. Everybody understands the market environment and challenges. You really have to be on the ball these days, and I strongly believe that our team is very capable of meeting the challenges that exist in today's marketplace."

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