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 High-Income Municipal Bond seeks to provide a high level of current income exempt from regular federal taxes. ABHFX invests at least 80% of its assets in tax-exempt securities.
American High-Income Municipal Bond has three-year annualized returns of 2%. Chad M. Rach has been one of the fund managers of ABHFX since 2011.
American Funds Tax-Aware Conservative Growth and Income Portfolio invests most of its net assets in a variety of funds from the United States in various combinations and weights to generate income from their investments. It 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 5.9%. TAIAX has an expense ratio of 0.32%.
JPMorgan New York Tax Free Bond Fund seeks to provide monthly dividends that are excluded from gross income for federal income tax purposes and are exempt from New York State and New York City personal income taxes. VANTX invests at least 80% of its assets in New York municipal obligations whose interest payments are excluded from gross income for federal income tax purposes, exempted from New York State and New York City income taxes and are not subject to the federal alternative minimum tax on individuals.
JPMorgan New York Tax Free Bond Fund has three-year annualized returns of 1.2%. As of the end of November 2024, VANTX held 46.5% of its net assets in miscellaneous bonds.
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3 Municipal Bond Funds to Invest in for Steady Returns
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 High-Income Municipal Bond ((ABHFX - Free Report) ), American Funds Tax-Aware Conservative Growth and Income Portfolio ((TAIAX - Free Report) ) and JPMorgan New York Tax Free Bond Fund ((VANTX - 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 High-Income Municipal Bond seeks to provide a high level of current income exempt from regular federal taxes. ABHFX invests at least 80% of its assets in tax-exempt securities.
American High-Income Municipal Bond has three-year annualized returns of 2%. Chad M. Rach has been one of the fund managers of ABHFX since 2011.
American Funds Tax-Aware Conservative Growth and Income Portfolio invests most of its net assets in a variety of funds from the United States in various combinations and weights to generate income from their investments. It 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 5.9%. TAIAX has an expense ratio of 0.32%.
JPMorgan New York Tax Free Bond Fund seeks to provide monthly dividends that are excluded from gross income for federal income tax purposes and are exempt from New York State and New York City personal income taxes. VANTX invests at least 80% of its assets in New York municipal obligations whose interest payments are excluded from gross income for federal income tax purposes, exempted from New York State and New York City income taxes and are not subject to the federal alternative minimum tax on individuals.
JPMorgan New York Tax Free Bond Fund has three-year annualized returns of 1.2%. As of the end of November 2024, VANTX held 46.5% 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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