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 municipal bond funds, namely, JPMorgan Tax Aware Real Return (TXRAX - Free Report) , Vanguard Ltd-Term Tax Exempted (VMLTX - Free Report) and Invesco New Jersey Municipal (ONJAX - Free Report) . Each has earned 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 funds, their Zacks Rank and past performance.
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 2.1%. As of the end of July 2023, TXRAX held 46.9% of its net assets in miscellaneous bonds.
Vanguard Ltd-Term Tax Exempted fund invests most of its net assets in municipal bonds with top three credit-rating categories by nationally recognized rating agencies or, determined to be of comparable quality by the fund’s advisors. It also invests a small portion of its net assets in securities with lower credit ratings. VMLTX advisors try to maintain a dollar-weighted average maturity of 2 to 6 years on individual securities.
Vanguard Ltd-Term Tax Exempted fund has three-year annualized returns of 0.2%. VMLTX has an expense ratio of 0.17% compared with the category average of 0.60%.
Invesco New Jersey Municipal fund invests most of its assets along with borrowings, if any, in New Jersey municipal securities, derivatives and other instruments with similar economic characteristics. ONJAX advisors generally invest in securities with income exempted from regular federal individual and the fund's state income tax.
Invesco New Jersey Municipal fund has three-year annualized returns of 0.1%. Joshua Cooney has been the fund manager of ONJAX since November 2019.
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.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>
Zacks Naming Top 10 Stocks for 2024
Want to be tipped off early to our 10 top picks for the entirety of 2024?
History suggests their performance could be sensational.
From 2012 (when our Director of Research, Sheraz Mian assumed responsibility for the portfolio) through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2024. Don’t miss your chance to get in on these stocks when they’re released on January 2.
Be First to New Top 10 Stocks >>
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 municipal bond funds, namely, JPMorgan Tax Aware Real Return (TXRAX - Free Report) , Vanguard Ltd-Term Tax Exempted (VMLTX - Free Report) and Invesco New Jersey Municipal (ONJAX - Free Report) . Each has earned 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 funds, their Zacks Rank and past performance.
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 2.1%. As of the end of July 2023, TXRAX held 46.9% of its net assets in miscellaneous bonds.
Vanguard Ltd-Term Tax Exempted fund invests most of its net assets in municipal bonds with top three credit-rating categories by nationally recognized rating agencies or, determined to be of comparable quality by the fund’s advisors. It also invests a small portion of its net assets in securities with lower credit ratings. VMLTX advisors try to maintain a dollar-weighted average maturity of 2 to 6 years on individual securities.
Vanguard Ltd-Term Tax Exempted fund has three-year annualized returns of 0.2%. VMLTX has an expense ratio of 0.17% compared with the category average of 0.60%.
Invesco New Jersey Municipal fund invests most of its assets along with borrowings, if any, in New Jersey municipal securities, derivatives and other instruments with similar economic characteristics. ONJAX advisors generally invest in securities with income exempted from regular federal individual and the fund's state income tax.
Invesco New Jersey Municipal fund has three-year annualized returns of 0.1%. Joshua Cooney has been the fund manager of ONJAX since November 2019.
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.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>
Zacks Naming Top 10 Stocks for 2024
Want to be tipped off early to our 10 top picks for the entirety of 2024?
History suggests their performance could be sensational.
From 2012 (when our Director of Research, Sheraz Mian assumed responsibility for the portfolio) through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2024. Don’t miss your chance to get in on these stocks when they’re released on January 2.
Be First to New Top 10 Stocks >>
Get the latest research report on ONJAX - FREE
Get the latest research report on TXRAX - FREE
Get the latest research report on VMLTX - FREE