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3 Top-Ranked Municipal Bond Funds for Steady Income
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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 for building roads, schools and a host of other projects for the public good. These municipal securities regularly pay interest payments, usually semiannually, 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 funds are believed to provide regular income while protecting the capital invested. While mutual funds from this category aim to provide dividends more frequently than other bonds, they offer greater stability than those primarily focusing on equity and alternative securities.
Colorado BondShares Tax-Exempt seeks to allocate no less than 80% and up to 100% of its net assets to tax-exempt bonds and other tax-exempt securities, such as notes and municipal leases issued by the State of Colorado, its municipalities, public authorities, and political subdivisions.
Colorado BondShares Tax-Exempt has three-year annualized returns of 5%. As of March 2025, HICOX had 30.3% of its assets invested in Total Misc. Bonds.
Eaton Vance Total Return Bond Fund commits the majority of its net assets for investment purposes, to bonds and other income instruments. EBABX advisors may also allocate a portion of its assets to below investment-grade bonds, as well as to unrated instruments that they consider to be of similar quality, often referred to as “junk bonds.”
Eaton Vance Total Return Bond Fund has three-year annualized returns of 4.8%. Vishal Khanduja has been one of the fund managers of EBABX since 2019.
Victory Tax Exempt Short Term Fund focuses on investment-grade securities that provide interest exempt from federal income tax. It mainly holds tax-exempt securities with a short average maturity. Most of its annual net investment income dividends are also free from federal income tax, including exclusion from the alternative minimum tax for individuals.
Victory Tax Exempt Short Term Fund has three-year annualized returns of 3.7%. USSTX has an expense ratio of 0.46%.
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3 Top-Ranked Municipal Bond Funds for Steady Income
Municipal bonds, or "muni bonds," comprise debt securities issued by various states, cities, counties and other governmental entities to raise money for building roads, schools and a host of other projects for the public good. These municipal securities regularly pay interest payments, usually semiannually, 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 funds are believed to provide regular income while protecting the capital invested. While mutual funds from this category aim 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.,Colorado BondShares Tax-Exempt (HICOX - Free Report) , Eaton Vance Total Return Bond Fund (EBABX - Free Report) and Victory Tax Exempt Short Term Fund (USSTX - 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.
Colorado BondShares Tax-Exempt seeks to allocate no less than 80% and up to 100% of its net assets to tax-exempt bonds and other tax-exempt securities, such as notes and municipal leases issued by the State of Colorado, its municipalities, public authorities, and political subdivisions.
Colorado BondShares Tax-Exempt has three-year annualized returns of 5%. As of March 2025, HICOX had 30.3% of its assets invested in Total Misc. Bonds.
Eaton Vance Total Return Bond Fund commits the majority of its net assets for investment purposes, to bonds and other income instruments. EBABX advisors may also allocate a portion of its assets to below investment-grade bonds, as well as to unrated instruments that they consider to be of similar quality, often referred to as “junk bonds.”
Eaton Vance Total Return Bond Fund has three-year annualized returns of 4.8%. Vishal Khanduja has been one of the fund managers of EBABX since 2019.
Victory Tax Exempt Short Term Fund focuses on investment-grade securities that provide interest exempt from federal income tax. It mainly holds tax-exempt securities with a short average maturity. Most of its annual net investment income dividends are also free from federal income tax, including exclusion from the alternative minimum tax for individuals.
Victory Tax Exempt Short Term Fund has three-year annualized returns of 3.7%. USSTX has an expense ratio of 0.46%.
To view the Zacks Rank and the past performance of all municipal bondfunds, investors can click here to see the complete list of municipal bond funds.
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