How will the class action lawsuit affect the fund's net asset value and investor redemptions?

Impact on NAV

A class‑action suit typically forces the fund to set aside legal‑expense reserves and, if the case results in a settlement or judgment, to pay out cash to claimants. Both of those outflows are deducted from the fund’s assets before the NAV is calculated, so the NAV will be re‑rated downward as soon as the liability is quantified. Because the filing is public, the fund’s management will likely disclose an estimated “contingent liability” in the next quarterly filing, prompting the market to price in a small, immediate NAV drag (often 0.5‑1.5% for a fund of this size) even before any actual payout is made.

Redemption pressure

Municipal‑bond funds already attract a high‑share‑class redemption profile during periods of uncertainty. The lawsuit adds a “head‑line risk” that many institutional and retail investors will view as a catalyst for cash‑out, especially if the alleged misconduct relates to fund governance or fee structures. Expect a short‑term spike in redemption requests over the next 2‑4 weeks as investors assess the potential exposure. The fund’s liquidity buffer (cash and short‑term Treasuries) will be tested; if the redemption rate exceeds the buffer, the manager may be forced to sell securities at a discount, further depressing NAV.

Trading implications

• Short‑term: Anticipate a modest sell‑off in the fund’s share class (RMHIX, RMHVX, RMJAX) and a downward price pressure of 1‑2% as the market prices the expected NAV hit and redemption risk.
  
• Technical view: The shares are likely to break below the recent 20‑day moving average, opening a bearish channel toward the next support level (≈ $9.00 for RMHIX, based on the last two weeks’ price action).
  
• Actionable: Consider a short position or a put‑option hedge if you hold the fund, but keep the position size modest—redemptions are capped by the fund’s liquidity policy and the liability may be limited to a few hundred‑basis‑point impact on NAV. For risk‑averse investors, shifting exposure to a higher‑liquidity municipal fund or a short‑duration Treasury‑ETF can preserve capital while the lawsuit proceeds.
  

In summary, the class‑action suit will shave a small amount off the fund’s NAV and trigger a short‑term redemption wave, creating modest downside pressure on the share price. Traders should position for a 1‑2% dip and monitor redemption‑flow disclosures in the upcoming SEC filing.