The debt securities category will always be the first choice for risk-averse investors because this class of instruments provides a regular income at low levels of risk. Income from regular dividends helps to ease the pain caused by plunging stock prices.

 

When considering the safety of capital invested, municipal bond mutual funds are second only to those investing in government securities. In addition, interest income earned from these securities is exempt from federal taxes and, in many cases, from state taxes.

 

Below, we share with you three top-ranked municipal bond funds, viz., JPMorgan Tax Aware Real Return Fund (TXRAX Quick QuoteTXRAX - Free Report) , Colorado BondShares (HICOX Quick QuoteHICOX - Free Report) and Eaton Vance Total Return Bond Fund (EBABX Quick QuoteEBABX - 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.

 

JPMorgan Tax Aware Real Return Fund seeks to safeguard after-tax returns by investing in a portfolio of municipal obligations that offer interest payments exempted from federal income taxes. TXRAX creates inflation protection instruments by investing in a combination of conventional municipal securities and inflation-linked derivatives, such as CPI-U swaps.

 

JPMorgan Tax Aware Real Return Fund has three-year annualized returns of 5.1%. David P. Rooney has been one of the fund managers of TXRAX since 2015.

 

Colorado BondShares seeks to achieve capital appreciation by investing in tax-exempt bonds and tax-exempt securities, such as tax-exempt notes and tax-exempt municipal leases of the State of Colorado and related organizations. HICOX distributes capital gains yearly, distributes dividends on a monthly basis, and pays out dividends daily.

 

Colorado BondShares has three-year annualized returns of 2.7%. HICOX has an expense ratio of 0.55% compared with the category average of 0.83%.

 

Eaton Vance Total Return Bond Fund invests its net assets in bonds and other fixed and floating-rate income instruments. EBABX also invests in bonds and income instruments that are either rated below investment grade or unrated.

 

Eaton Vance Total Return Bond Fund has three-year annualized returns of 2.6%. As of December 2022, EBABX had 5.9% of its assets invested in US TREAS NOTES.

 

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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