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3 Top-Ranked Municipal Bond Funds to Hedge Your Risk
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Municipal bonds, or "muni bonds," comprise debt securities issued by various states, cities, counties and other governmental entities to raise money to build roads, schools and a host of other projects for public good. These municipal securities make regular interest payments, usually semi-annually, and the original investment or principal amount at the time of maturity. Interest paid on such bonds is generally exempted from federal taxes, making them especially attractive to people in higher income tax brackets.
Thus, risk-averse investors looking to earn a regular tax-free income may consider municipal bond mutual funds. These mutual funds are believed to provide regular income while protecting the capital invested. While mutual funds from this category seek to provide dividends more frequently than other bonds, they offer greater stability than those primarily focusing on equity and alternative securities.
American Funds Tax-Aware Conservative Growth and Income Portfolio invests in a variety of funds from the United States in different combinations and weights. The funds that it invests in are characterized to generate income from their investments and may include growth-and-income, equity-income, balanced and fixed-income funds. TAIAX also focuses on dividend-paying stocks and invests a portion in emerging markets.
American Funds Tax-Aware Conservative Growth and Income Portfolio has three-year annualized returns of 4.4%. Andrew B. Suzman has been one of the fund managers of TAIAX since 2012.
Invesco Limited Term Municipal Income Fund seeks to generate a high level of tax-exempt income. AITFX invests most of its assets in securities that generate income that is not subject to regular tax rules and that is not subject to the alternative minimum tax rules.
Invesco Limited Term Municipal Income Fund has three-year annualized returns of 0.7%. AITFX has an expense ratio of 0.33%.
JPMorgan Tax Aware Real Return Fund seeks after-tax returns by investing most of its net assets in a portfolio of municipal securities whose interest payments are excluded from federal income tax. TXRAX creates inflation-protected instruments by investing in a combination of municipal securities along with inflation-linked derivatives such as Non-Seasonally Adjusted Consumer Price Index for all Urban Consumers (CPI-U) swaps.
JPMorgan Tax Aware Real Return Fund has three-year annualized returns of 1.9%. As of the end of October 2023, TXRAX held 43.5% of its net assets in miscellaneous bonds.
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3 Top-Ranked Municipal Bond Funds to Hedge Your Risk
Municipal bonds, or "muni bonds," comprise debt securities issued by various states, cities, counties and other governmental entities to raise money to build roads, schools and a host of other projects for public good. These municipal securities make regular interest payments, usually semi-annually, and the original investment or principal amount at the time of maturity. Interest paid on such bonds is generally exempted from federal taxes, making them especially attractive to people in higher income tax brackets.
Thus, risk-averse investors looking to earn a regular tax-free income may consider municipal bond mutual funds. These mutual funds are believed to provide regular income while protecting the capital invested. While mutual funds from this category seek to provide dividends more frequently than other bonds, they offer greater stability than those primarily focusing on equity and alternative securities.
Below, we share with you three top-ranked municipal bond funds, viz., American Funds Tax-Aware Conservative Growth and Income Portfolio (TAIAX - Free Report) , Invesco Limited Term Municipal Income Fund (AITFX - Free Report) and JPMorgan Tax Aware Real Return Fund (TXRAX - Free Report) . Each has a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of municipal bond funds.
American Funds Tax-Aware Conservative Growth and Income Portfolio invests in a variety of funds from the United States in different combinations and weights. The funds that it invests in are characterized to generate income from their investments and may include growth-and-income, equity-income, balanced and fixed-income funds. TAIAX also focuses on dividend-paying stocks and invests a portion in emerging markets.
American Funds Tax-Aware Conservative Growth and Income Portfolio has three-year annualized returns of 4.4%. Andrew B. Suzman has been one of the fund managers of TAIAX since 2012.
Invesco Limited Term Municipal Income Fund seeks to generate a high level of tax-exempt income. AITFX invests most of its assets in securities that generate income that is not subject to regular tax rules and that is not subject to the alternative minimum tax rules.
Invesco Limited Term Municipal Income Fund has three-year annualized returns of 0.7%. AITFX has an expense ratio of 0.33%.
JPMorgan Tax Aware Real Return Fund seeks after-tax returns by investing most of its net assets in a portfolio of municipal securities whose interest payments are excluded from federal income tax. TXRAX creates inflation-protected instruments by investing in a combination of municipal securities along with inflation-linked derivatives such as Non-Seasonally Adjusted Consumer Price Index for all Urban Consumers (CPI-U) swaps.
JPMorgan Tax Aware Real Return Fund has three-year annualized returns of 1.9%. As of the end of October 2023, TXRAX held 43.5% of its net assets in miscellaneous bonds.
To view the Zacks Rank and the past performance of all municipal bond funds, investors can click here to see the complete list of municipal bond funds.
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