Back to top

5 Strong Buy California Muni Bond Mutual Funds

Read MoreHide Full Article

California municipal bond mutual funds seek tax-free stable income by investing in municipal debt obligations of issuers from the state. These mutual funds are expected to offer the state’s investors a Federal income tax and California state income tax exempted steady income.

Meanwhile, municipal bonds or “munis” are preferred by investors seeking a steady stream of tax free income in a volatile market. Though munis come with lower yields compared to taxable bonds, they fetch better returns for investors in high tax brackets if we consider after-tax returns.

Below we share with you 5 top-rated California muni bond mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and we expect the funds to outperform their peers in the future. To view the Zacks Rank and past performance of all muni bond mutual funds, investors can click here to see the complete list of muni bond funds .

American Century California High-Yield Municipal Investor (BCHYX - Free Report) seeks a tax-exempted high level of current income. BCHYX invests a lion’s share of its assets in municipal securities that are expected to provide income exempted from federal and California income taxes. BCHYX mainly invests in California municipal debt securities that are rated below investment grade and are expected to provide high yield. BCHYX may also invest in unrated securities. The American Century California High-Yield Municipal Investor fund is non-diversified and has returned 2.6% in the year-to-date frame.

BCHYX has an expense ratio of 0.50% compared to the category average of 0.86%.

USAA California Bond (USCBX - Free Report) invests a large chunk of its assets in securities issued by the state of California that are expected to pay interest income, free from federal income tax and California state income tax. USCBX focuses on acquiring long-term securities. USCBX is expected to maintain dollar-weighted average maturity duration of more than 10 years. The USAA California Bond fund has returned 2.3% in the year-to-date frame.

John C. Bonnell is the fund manager of USCBX since 2006.

MFS California Municipal Bond A (MCFTX - Free Report) seeks tax free total return with capital growth. MCFTX invests the majority of its assets in municipal debt securities and other derivatives with returns that are not subject to federal income tax and the personal income tax of California. However, MCFTX may invest in securities that pay interest but are not exempted from the federal alternative minimum tax. The MFS California Municipal Bond A fund has returned 2.4% in the year-to-date frame.

As of August 2015, MCFTX held 191 issues, with 1.52% of its assets invested in California St Various P 5.5%.

Nuveen California Municipal Bond A (NCAAX - Free Report) invests a major portion of its assets in municipal debt obligations that provide interest income exempted from federal and California personal income tax. NCAAX invests in securities including bonds of the State of California or its affiliates, and debt obligations issued by the U.S. government. The Nuveen California Municipal Bond A fund has returned 2.5% in the year-to-date frame.

Scott R. Romans is the fund manager of NCAAX since 2003.

Fidelity Advisor California Municipal Income A (FCMAX - Free Report) seeks tax-exempted high current income. FCMAX invests a large share of its assets in municipal debt securities that are rated as investment-grade and are expected to pay interest income free from federal and California personal income taxes. FCMAX invests a minimum of one-fourth of its assets in municipal securities. Moreover, the fund’s investments include securities across a wide range of market sectors irrespective of maturity durations. The Fidelity Advisor California Municipal Income A fund has returned 1.7% in the year-to-date frame.

FCMAX has an expense ratio of 0.79% compared to the category average of 0.86%.

To view the Zacks Rank and past performance of all muni bond mutual funds, investors can click here to see the complete list of muni bond funds .

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at https://www.zacks.com/funds.



More from Zacks Best of Funds

You May Like