5 Zacks #1 Rank Muni Bond Mutual Funds - Mutual Fund Commentary
Debt securities will always be the natural choice of the risk-averse investor because this category of instruments provides regular income flow at low levels of risk. Income from regular dividends helps to ease the pain caused by plunging stock prices. When considering safety of capital invested, municipal bond mutual funds are second only to those investing in government securities. In addition, the interest income earned form these securities are exempt from federal taxes and in many cases from state taxes as well.
Below we will share with you 5 best rated municipal bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all municipal bond funds, investors can click here to see the complete list of funds.
Columbia Tax-Exempt A (COLTX) seeks total return through tax-free current income and growth of capital. COLTX invests a large share of its assets in bonds that are expected to pay interest exempted from federal income tax, which may also include federal alternative minimum tax. COLTX invests a minimum of 65% of its assets in comparable quality bonds including both investment-grade and non investment-grade bonds. COLTX invests in bonds irrespective of their maturities. The Columbia Tax-Exempt A fund returned 3.9% over the last one year period.
Kimberly Campbell is the fund manager and has managed COLTX since 2002.
Pioneer AMT-Free Municipal A (PBMFX) is expected to invest heavily in investment grade municipal bonds, income from which is free from regular federal income tax. PBMFX focuses on acquiring securities having maturity period above one year. PBMFX may invest a maximum of 10% of its assets in non-investment grade debt instruments. The Pioneer AMT-Free Municipal A fund returned 3.8% over the last one year period.
PBMFX has an expense ratio of 0.83% as compared to category average of 0.91%.
Delaware Tax-Free Colorado A (VCTFX) seeks high level of tax-exempted current income. VCTFX allocates a large chunk of its assets in municipal securities that provide income free from federal income tax and Colorado state personal income taxes. VCTFX is expected to maintain a dollar-weighted average effective maturity within the range of 5 to 30 years. The Delaware Tax-Free Colorado A fund returned more than 3.8% over the last one year period.
As of March 2015, this fund held 106 issues with 4.57% of its assets invested in Denver Colo City & Cnty Arpt R Rev Bd 5%.
Franklin Florida Tax-Free Income A (FRFLX) invests a major portion of its assets in securities that pay interest exempted from federal income taxes and personal income taxes of Florida. FRFLX may invest at most 35% of its assets in municipal instruments approved by the U.S. territories. The Franklin Florida Tax-Free Income A fund returned more than 3.7% over the last one year period.
FRFLX has an expense ratio of 0.64% as compared to category average of 0.98%.
T. Rowe Price New Jersey Tax-Free Bond (NJTFX) seeks high tax-free income. NJTFX invests a lion’s share of its assets in bonds that are expected to provide interest income that is free from Federal and New Jersey state income taxes. NJTFX may invest a maximum of 10% of its assets in securities that are not rated as investment-grade. The T. Rowe Price New Jersey Tax-Free Bond fund is non-diversified and returned 3.12% over the last one year period.
Konstantine B. Mallas is the fund manager and has managed NJTFX since 2000.
To view the Zacks Rank and past performance of all municipal bond mutual funds, investors can click here to see the complete list of funds.
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