Municipalities and nonprofit organizations looking for ways to reduce volatile and expensive variable-rate debt payments may soon have another solution.

Fairmount Capital Advisors, a Philadelphia-based financial advisory firm, is in the process of forming a pair of investment funds to buy auction-rate securities and insured variable-rate demand obligations. The tandem funds will work so that issuers who are investors in one of the funds will be able to sell their securities to the other fund, without worrying about Securities and Exchange Commission rules or other potential conflicts of interest.

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