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3 California Muni Bond Mutual Funds Worth Considering

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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 federal income tax and California state income tax exempted steady income. Moreover, 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 than taxable bonds, they fetch better returns for investors in high tax brackets if we consider after-tax returns.

Below we share with you four top-rated California muni bond mutual funds. Each has earned 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 muni bond funds.

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 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. The Fidelity Advisor California Municipal Income A fund has three-year annualized returns of 1.5%.

FCMAX has an expense ratio of 0.80% compared with the category average of 0.86%.

SEI California Municipal Bond F (STET) (SBDAX - Free Report) seeks to provide the highest level of current income which is exempted from federal as well as California state income taxes. The fund invests the lion’s share of its assets in municipal securities that are considered investment-grade and include municipal bonds, notes and commercial paper. SEI California Municipal Bond F has three-year annualized returns of 1%.

As of January 2019, SBDAX held 201 issues, with 3.46% of its assets invested in California St 5%.

Northern California Tax-Exempt (NCATX - Free Report) seeks a high level of tax-exempted income. NCATX invests the majority of its assets in debt securities that are believed to offer returns that are exempted from California state personal income tax and regular federal income tax. Moreover, NCATX is expected to maintain a dollar-weighted average maturity between 10 and 30 years. NCATX is a non-diversified fund and may also invest in securities that are rated below investment grade. Northern CA Tax-Exempt has three-year annualized returns of 1.7%.

NCATX has an expense ratio of 0.46% compared with 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.

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