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Buy These 3 Top-Ranked Municipal Bond Funds for Mitigating Risk
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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 make 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.
Goldman Sachs High Yield Municipal Fund invests most of its assets, along with borrowings, if any, in fixed-income securities issued by or on behalf of states, territories and possessions of the United States and the political subdivisions, agencies and instrumentalities. GHYAX advisors invest in securities, the interest on which is exempt from regular federal income tax.
Goldman Sachs High Yield Municipal Fund has three-year annualized returns of 4.1%. As of the end of June 2026, GHYAX had 79.1% of its net assets invested in Miscellaneous Bonds.
Victory Tax Exempt Short Term Fund invests most of its net assets in investment-grade securities with a short average maturity that provide interest exemption from federal income tax. USSTX advisors’ 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 3.5%. USSTX has an expense ratio of 0.55%.
Vanguard Limited Term Tax-exempt 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 Limited Term Tax-exempt Fund has three-year annualized returns of 3.4%. Adam Ferguson has been the fund manager of VMLTX since May 2017.
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Buy These 3 Top-Ranked Municipal Bond Funds for Mitigating Risk
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 make 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 bondfunds, viz.,Goldman Sachs High Yield Municipal Fund (GHYAX - Free Report) , Victory Tax Exempt Short Term Fund (USSTX - Free Report) and Vanguard Limited Term Tax-exempt Fund (VMLTX - 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.
Goldman Sachs High Yield Municipal Fund invests most of its assets, along with borrowings, if any, in fixed-income securities issued by or on behalf of states, territories and possessions of the United States and the political subdivisions, agencies and instrumentalities. GHYAX advisors invest in securities, the interest on which is exempt from regular federal income tax.
Goldman Sachs High Yield Municipal Fund has three-year annualized returns of 4.1%. As of the end of June 2026, GHYAX had 79.1% of its net assets invested in Miscellaneous Bonds.
Victory Tax Exempt Short Term Fund invests most of its net assets in investment-grade securities with a short average maturity that provide interest exemption from federal income tax. USSTX advisors’ 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 3.5%. USSTX has an expense ratio of 0.55%.
Vanguard Limited Term Tax-exempt 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 Limited Term Tax-exempt Fund has three-year annualized returns of 3.4%. Adam Ferguson has been the fund manager of VMLTX since May 2017.
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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