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, state taxes.
Below, we share with you three top-ranked municipal bond funds, viz., American Funds Tax-Aware Conservative Growth and Income Portfolio TAIAX, Colorado Bond Shares A Tax Exempt Fund HICOX and AB Municipal Bond Inflation Strategy AUNAX. 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 Funds Tax-Aware Conservative Growth and Income Portfolio invests in a variety of funds from the United States in different combinations and weights. The funds that it invests in are characterized to generate income from their investments and 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 4.1%. TAIAX has an expense ratio of 0.34% compared with the category average of 0.72%.
Colorado Bond Shares A Tax Exempt Fund invests the majority of its net assets in tax-exempt bonds and other tax-exempt securities, including tax-exempt notes and tax-exempt municipal leases of the State of Colorado and related organizations. HICOX declares dividends daily and distributes them monthly.
Colorado Bond Shares A Tax Exempt Fund has three-year annualized returns of 0.7%. Fred R. Kelly Jr.has been one of the fund managers of HICOX since October 1990.
AB Municipal Bond Inflation Strategy invests the majority of its net assets in high-quality investment-grade municipal fixed-income securities that pay interest exempt from federal tax, and are rated A or better by one or more recognized rating agencies. AUNAX also invests a small portion of its assets in below-investment-grade fixed-income securities or junk bonds.
AB Municipal Bond Inflation Strategy has three-year annualized returns of 2.2%. As of April 2023, AUNAX had 62.6% of its assets invested in Total Misc. Bonds.
Get Your Free (TAIAX): Fund Analysis Report
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Get Your Free (HICOX): Fund Analysis Report
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