All numbers below are as of February 11, 2021., MMIN is an actively-managed ETF that aims to provide investors with current income that is exempt from federal income taxes by investing primarily in insured municipal bonds. The Best Municipal-Bond Funds. A tax efficient fund is a mutual fund structured to reduce tax liability. These include white papers, government data, original reporting, and interviews with industry experts. It also requires an initial investment of $1,000.. Accessed Nov. 14, 2020. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Morningstar. Cryptocurrency. The Fund also invests in derivative instruments, investments whose values depend on the performance of the underlying security, assets, interest rate, index or currency and entail potentially higher volatility and risk of loss compared to traditional stock or bond investments. Accessed Feb. 14, 2021. Municipal bond arbitrage refers to an investor leveraging the tax-exempt status of municipal bonds to hedge their portfolio's duration risk. Economic activity screeched to a halt, revenues plunged, and prices on many existing municipal bonds fell. Tax-advantaged refers to any type of investment, account, or plan that is either exempt from taxation, tax-deferred, or offers other types of tax benefits. T. Rowe Price Maryland Tax-Free Bond Fund, 5. It provides exposure to municipal securities rated in the top four ratings categories at the time they are purchased. Individual investors have the ability to purchase municipal bonds individually through the entity issuing the security, or investors may use a pooled investment strategy such as a mutual fund to gain more exposure to multiple municipal bond issues. The mutual fund's expense ratio is 0.67%, and investors are charged an upfront sales load of 3.75% when they purchase shares. We examine the top 3 best municipal bond ETFs below. Morningstar. Fund category: Multisector bond. All information was current as of December 2020. Year to date through the Refinitiv Lipper fund-flows week ended February 10, 2021, mutual fund and ETF investors have injected $19.1 billion into municipal bond funds. Assets … American High-Income Municipal Bond Fund, 2. Municipal bonds, as measured by the Bloomberg Barclays Municipal Bond Index, have underperformed the broader market with a total return of 4.5% over the past 12 months compared to the S&P 500's total return of 18.9%, as of February 10, 2021. The best-performing municipal bond ETF for Q2 2021, based on performance over the past year, is the IQ MacKay Shields Municipal Insured ETF (MMIN). Accessed Feb. 11, 2021.. Accessed Feb. 15, 2021. The fund follows a relative value strategy based on credit analysis, yield curve positioning, and sector rotation. Opinions expressed by Forbes Contributors are their own. "Beta Advantage Multi-Sector Municipal Bond Index – ETF Tracker." These tax havens collect income from the funding of projects like toll roads in Denver and a convention center renovation in Chicago. "ETF Screener." The top respective holdings of these ETFs are bonds issued by: the Metropolitan Transportation Authority of New York; the Iowa Finance Authority; and the New York City Municipal Water Finance Authority. Accessed Nov. 14, 2020. Browse Long-Term Municipal Bond Funds theme to find information on returns, expenses, dividend yield, ... Mar 30, 2021 These funds are focused on companies that are trading at an attractive valuation... News Mutual Funds Scorecard: March 24 Edition Iuri Struta | Mar 24, 2021 Morningstar. Accessed Nov. 14, 2020. As of November 2020, the T. Rowe Price Maryland Tax-Free Bond Fund has generated a 10-year annualized return of 3.78% with an expense ratio of 0.48%. General obligation bonds, or those backed by the taxing power of the issuing entity, are considered to be safer investments than revenue bonds, or those used to fund specific projects. Accessed Nov. 14, 2020. "How COVID-19 Has Affected the Municipal Bond Market." The mutual fund diversifies holdings across low and highly rated bond issues, with a significant amount of assets in debt securities rated BBB+ or below. BNY Mellon Municipal Bond Infrastructure Fund, Inc. (NYSE: DMB) today announced a distribution of $0.0530 per share of common stock, payable on June 1, 2021 … Investopedia requires writers to use primary sources to support their work. The Federal Reserve Bank of St. Louis. This fund is targeted at higher net-worth investors, who are required to make an initial investment of $100,000 for qualified and non-qualified accounts., The Vanguard Intermediate-Term Tax-Exempt Fund (VWITX) has an inception date of 1977, making it one of the longest-standing municipal bond mutual funds on the market. Lower yield: Municipal bond funds tend to pay lower yields than other types of bond funds. As illustrated in the chart below, after-tax yields for municipal bonds are higher than both Treasuries and corporate bonds for investors in higher tax brackets. Morningstar. The ETFs with the best 1-year trailing total return are MMIN, FLMB, and MUST. "T. Rowe Price Maryland Tax-Free Bond." ETFdb.com. The interest received on a municipal bond is generally exempt from federal tax, and in some cases, state and city tax as well. "Nuveen High Yield Municipal Bond I." VTEB’s annual cost is 0.06%, … "Invesco Rochester® Municipal Opps A." Treasuries are issued at the federal level. The perceived risk of munis was heightened last year amid the COVID-19 pandemic, which has placed enormous financial strain on state and municipal budgets. ETFdb.com. "Invesco Rochester® Municipal Opps A." The Fund was assessed against 55 other funds in this category. Its top three holdings include bonds issued by the New York City Municipal Water Finance Authority; the New Jersey Transportation Trust Fund Authority; and the Metropolitan Transportation Authority of New York.. Nuveen High Yield Municipal Bond Fund I, 3. The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. Investopedia requires writers to use primary sources to support their work. "You take on more credit risk, but credit risk in the high-yield space doesn't necessarily mean speculative grade or junk bonds," he says, pointing to HYD's weight to BB-rated bonds -- double that of its category. The fund tracks a market-weighted index of high-yield, long-term and tax-exempt muni bonds, and it's one of the few high-yield muni bond ETFs. Municipal bonds, … Accessed Feb. 15, 2021. Vanguard Intermediate-Term Tax-Exempt Fund Investor Shares, 4. What Are Capital Gains ... municipal bonds come up because they help fund projects for state and local ... if you find a bond fund that includes munis, you can be invested in those bonds and receive the advantages. Accessed Feb. 11, 2021.. ETFdb.com. Great-West Multi-Sector Bond. Here are the highest-rated mutual funds and ETFs across a series of Morningstar’s municipal bond fund categories. What investors should expect from 2021’s municipal bond market. Because general obligation bonds expose investors to less risk, interest rates paid on these municipal bonds are lower than other debt securities. That implies projected 2021 returns of 3%-4% from corporate high-yield and floating rate bond funds. The mutual fund invests at least 80% of its $7.4 billion net assets in high-yield municipal bonds issued across the U.S. with tax-exempt income., As of November 2020, the fund has generated a 10-year annualized return of 6.89% for investors. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The fund seeks to provide investors with current income that is exempt from federal personal income tax by investing a minimum of 75% of its $78.2 billion in assets in municipal bonds rated in the top three rating categories.. T. Rowe Price's mutual funds typically stand out among their peers, but these two selections provide elite equity and bond exposure for this point in … February 24, 2021 Customer Service The bond market is the collective name given to all trades and issues of debt securities. Accessed Nov. 14, 2020. All returns as of Dec. 31, 2019. New York Life Investments. While many of these bonds are rated "investment grade" by ratings agencies, indicating a relatively low degree of credit risk, they are not risk-free. "MUST – Columbia Multi-Sector Municipal Income ETF." ETFdb.com. "IQ MacKay Shields Municipal Insured ETF." While municipal bonds are attractive to investors in higher tax brackets, the securities carry a degree of risk. The Covid-19 pandemic made 2020 a year like no other. Municipal bonds underperformed the broader market over the past year. Municipal bonds are debt securities issued by government entities that provide modest returns by way of interest payments over the duration of the bonds. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. Accessed Feb. 14, 2021. The addition of municipal bond mutual funds can enhance a portfolio. This has caused benchmark municipal yields to decrease to multi-year lows. It mostly invests in investment-grade munis that are accompanied by an insurance policy guaranteeing the payment of both principal and interest. ETFdb.com. Education For individual investors seeking tax-advantaged investment strategies in the fixed-income space, municipal bonds offer an attractive solution. "Franklin Liberty Federal Tax-Free Bond ETF." Here, we take a look at 5 top-rated muni funds. We read that the municipal bond investors continues to stretch … Do the math or consult your financial adviser to see if a municipal bond fund’s tax-free status offsets the relatively lower yield. Updated Feb 16, 2021 Municipal bond exchange-traded funds (ETFs) provide investors with diversified access to the municipal bond market. Oppenheimer Rochester High Yield Municipal Fund Class A. The mutual fund has an expense ratio of 0.99% and is a no-load fund with no deferred sales charge is imposed at the time of redemption. Municipal fund flows turned positive in May and stayed positive through the end of the year. There are 39 distinct municipal bond ETFs that trade in the U.S., excluding inverse and leveraged ETFs, as well as funds with less than $50 million in assets under management (AUM). Although municipal bonds face headwinds in 2021, we think they are attractive relative to alternatives. As of November 2020, the American High Income Municipal Bond Fund has generated a 10-year annualized return of 5.46%. The views and strategies described on our content may not be suitable for all investors. Fixed-income funds that distribute income that is not subject to taxation at the federal, state, and sometimes local levels. Tax-free refers to certain types of goods and/or financial products, such as municipal bonds, that are not taxed. Vanguard Municipal Bond To find out detailed information on Vanguard Municipal Bond in the U.S., click the tabs in the table below. The fund tracks the S&P Municipal Bond Index, which is made of investment-grade issues and diversified across states. The mutual fund does not impose an upfront or a deferral sales charge to investors, although an initial investment of $2,500 is required for both qualified and non-qualified accounts., The Oppenheimer Rochester High Yield Municipal Fund (ORNAX) has an inception date of October 1993. A revenue bond is a municipal bond supported by the revenue from a specific project, such as a toll bridge, highway or local stadium. Here's a look at some of the top municipal bond funds for 2020: the American High-Income Municipal Bond Fund (AMHIX), the Nuveen High Yield Municipal Bond Fund I (NHMRX), the Vanguard Intermediate-Term Tax-Exempt Fund Investor Shares (VWITX), the T. Rowe Price Maryland Tax-Free Bond Fund (MDXBX) and the Oppenheimer Rochester High Yield Municipal Fund Class A (ORNAX). You can learn more about the standards we follow in producing accurate, unbiased content in our. Which brings us to municipal, or “muni” bonds. 2021 Federal Income Tax Guide; Capital Gains. A minimum investment of $250 is required for both qualified and non-qualified investment accounts., The Nuveen High Yield Municipal Bond Fund (NHMRX) was established in 1999 and sought to provide investors with current income exempt from federal tax. "Coronavirus Surge Strains Municipal Bond Market, but Investors Still Pile In." Morningstar. Cryptocurrency is a kind of digital electronic-only currency that is intended to act as … Fund managers invest a minimum of 80% of the mutual fund's $18.7 billion in assets in municipal bonds that pay interest exempt from personal income tax on the federal level, with the majority of fund assets invested in long-term, lower-quality issues., The Nuveen High Yield Municipal Bond Fund has generated a 10-year annualized return of 6.62% for investors as of November 2020. Columbia Threadneedle Investments. Best Municipal Bond Funds The 2021 Best Mutual Funds logo and accolades are available for licensing through Investor's Business Daily's partner, The YGS Group… We also reference original research from other reputable publishers where appropriate. Morningstar. High-yield municipal bonds are appealing for tax-sensitive investors. Municipal bonds, or munis, are debt instruments issued by states, municipalities, or counties for the purpose of financing public capital expenditures, such as the construction of highways, bridges, and schools. Accessed Feb. 14, 2021. But the municipal bond market largely weathered the storm. It seeks to provide tax-exempt income by following a rules-based approach and offers a highly diversified portfolio of municipal bonds in a range of sectors. Head of BlackRock’s municipal bonds group, Peter Hayes joined Yahoo Finance Live to break down the municipal bond … Revenue bonds have a greater risk of default over time, but they can provide a higher rate of return to investors who are willing to take on that risk. The bond market is the collective name given to all trades and issues of debt securities. Capital appreciation is a secondary investment objective of the fund. Boston, MA, March 11, 2021 – Brown Brothers Harriman & Co. (BBH), is pleased to announce that the BBH Intermediate Municipal Bond Fund (Class I) was named the Best Intermediate Municipal Debt Fund over five years by Refinitiv Lipper, for the period ended December 31, 2020. Beyond the 7-year tenor, yields increased by 40 to 42 bps, with the 10-year tenor closing the month at 1.14%, its highest level since May 2020. For the most recent flows week, municipal bond funds attracted $2.6 billion, their fourth largest weekly net inflows on record. Investing in municipal bond funds allows investors to diversify among general obligation and revenue bonds with the potential for tax-exempt earnings. The offers that appear in this table are from partnerships from which Investopedia receives compensation. These are among some of the top-rated municipal bond funds to consider for 2021. "Vanguard Interm-Term Tx-Ex Inv." Muni Market Outlook - 2021. The American High-Income Municipal Bond Fund (AMHIX) was established in 1994 to provide investors with a high level of current income exempt from regular federal income tax. While a municipal yield might be lower than other bond investments, the “after-tax yield” can be higher. The data that can be found in each tab includes historical performance, the different fees in each fund, the initial investment required, asset allocation, manager information, and much more. The fund is comprised of 210 holdings with an average duration of 8.45 years and a weighted average maturity of 13.31 years. A money market fund is a type of mutual fund that invests in high-quality, short-term debt instruments and cash equivalents. If you're not investing with bonds, you could be missing out on huge returns. Tuesday, April 27, 2021. "Franklin Liberty Municipal Bond ETF." Accessed Feb. 11, 2021.. The Wall Street Journal. MUST – Columbia Multi-Sector Municipal Income ETF. Municipal bond funds tend to provide long-term, steady capital appreciation with a low degree of volatility. With MUB’s $17.9 billion in assets under management, municipal bond … The $780 million Performance Trust Municipal Bond fund takes advantage of its smaller size by getting into muni deals that larger competitors can’t buy into in a meaningful way. In 2021, we think another supply surge and the potential for policy changes may create volatility —and opportunity—for selective investors, including in municipal credit. Learn more about corporate, government, and municipal bonds. Bond holdings range in duration, and debt securities within the fund are focused on higher-quality issues. Check out Benzinga's in-depth view of municipal bonds in 2021. This article evaluates the performance of actively managed US open-end municipal bond mutual funds between 1999 and 2020. Municipal Bond Funds. Learn more about corporate, government, and municipal bonds. IQ MacKay Shields Municipal Insured ETF (MMIN), Franklin Liberty Federal Tax-Free Bond ETF (FLMB), Columbia Multi-Sector Municipal Income ETF (MUST), How COVID-19 Has Affected the Municipal Bond Market, Coronavirus Surge Strains Municipal Bond Market, but Investors Still Pile In, Franklin Liberty Federal Tax-Free Bond ETF, Beta Advantage Multi-Sector Municipal Bond Index – ETF Tracker, Columbia Multi-Sector Municipal Income ETF. A tax-exempt sector can refer to either a market niche comprised of investment vehicles, or non-profit organizations exempt from federal taxes. Great-West Trust Company. A transportation bond is a fixed-income security issued by a municipality to fund infrastructure needs related to public transportation. "Financial Data." "MMIN – IQ MacKay Municipal Insured ETF." Class S | March 31, 2021 Thrivent Municipal Bond Fund Inception Date Total Fund Assets Ticker Oct. 31, 1997 $1.6 billion TMBIX Fund Description This fund invests in a nationally-diversified portfolio of high-quality municipal bonds. A municipal bond is a debt security issued by a city, county or state government to finance its capital The mutual fund has an expense ratio of 0.95% and an up-front sales load of 4.25%. Accessed Feb. 15, 2021. This national municipal bond fund is one of the most popular, with access to more than 2,000 U.S. muni bonds. Oppenheimer Rochester High Yield Municipal Fund Class A. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy. A government bond is issued by a government at the federal, state, or local level to raise debt capital. BlackRock’s iShares National Muni Bond ETF and Vanguard’s Tax-Exempt Bond ETF, which hold about half of the $62 billion in muni ETF assets, have lost 1.05% and 1.06%, respectively. Issuer: Columbia Threadneedle Investments. Its top three holdings include bonds issued by the Metropolitan Transportation Authority of New York; the West Contra Costa Unified School District of California; and the Medford Oregon Hospital Facilities Authority Revenue Refunding Asante Health System., FLMB, formerly called the Franklin Liberty Municipal Bond ETF, is an actively managed ETF that seeks to provide current income exempt from federal income taxes. The Federal Reserve took measures early in the pandemic in order to help calm the municipal bond market. A municipal bond ETF can help to reduce risk through holding debt issued by a broad range of states, municipal governments, or agencies. Franklin Templeton. Investors are not charged an up-front or deferred sales load on share purchase or redemption, although an initial investment of $3,000 is required for new qualified and non-qualified accounts., The T. Rowe Price Maryland Tax-Free Bond Fund (MDXBX) was established in 1987 and sought to provide a high level of current income to fund investors. We also reference original research from other reputable publishers where appropriate. The Oppenheimer Rochester High Yield … It focuses on five sectors of the municipal debt market with a focus on yield, quality, maturity, liquidity, and interest rate sensitivity. The ETF uses a representative sampling approach, which results in a smaller number of holdings than found in the index. According to Lipper, which tracks investor flows into mutual funds, municipal bond funds have seen inflows in 48 of the past 49 weeks, totaling $101 billion. As an intermediate municipal bond fund, it maintains a dollar-weighted average maturity of six to 12 years, but fund managers do not have specific limitations on the maturity of individual securities held within the fund. A revenue bond is a municipal bond supported by the revenue from a specific project, such as a toll bridge, highway or local stadium. These include white papers, government data, original reporting, and interviews with industry experts. Municipal bond mutual funds offer tax-exempt yields to certain investors, using diversified portfolios that mitigate some of the debt instruments' risk. Abstract. Accessed Feb. 11, 2021. "Columbia Multi-Sector Municipal Income ETF." The fund's managers invest a substantial portion of the fund's $7.8 billion assets in municipal bond debt securities exempt from federal tax.. To the relief of many, we don’t expect 2021 will be a repeat of 2020. Yields for munis are higher than corporates and Treasuries at higher tax brackets 1. Accessed Nov. 14, 2020. Learn more about the best bond funds to add to your ... municipal bonds, corporate bonds and ... compare your options with Benzinga's top pics for best short-term investments in 2021. As of November 2020, the Vanguard Intermediate-Term Tax-Exempt Fund has generated a 10-year annualized return of 3.59% with an exceptionally low expense ratio of 0.17%. View Full Special Report: Best Mutual Funds Awards Fund managers invest a minimum of 80% of the fund's $2.5 billion assets in debt securities that are exempt from federal and Maryland state and local personal income taxes.. Of 450 municipal bond funds at least 10 years old, 68 of them, or 15%, won awards. Its top three holdings include bonds issued by the Iowa Finance Authority; the state of New Jersey; and the state of California., MUST tracks the performance of the Beta Advantage Multi-Sector Municipal Bond Index, which employs a rules-based, multi-sector strategic beta approach to gauging the performance of the U.S. tax-exempt bond market. YCharts. 2021 has started strong, with flows for January, February and March at $13 billion, $8 billion and $11 billion, respectively. "American High-Income Municipal Bond A." You can learn more about the standards we follow in producing accurate, unbiased content in our. Municipal bond exchange-traded funds (ETFs) provide investors with diversified access to the municipal bond market. For investors, munis generally offer tax-free interest income. When the COVID-19 crisis initially began, the normally calm municipal bond market was rapidly thrust into the spotlight. Fund classifications span national short, intermediate, and long-term, as well as high-yield and single-state portfolios. BNY Mellon Municipal Bond Infrastructure Fund, Inc. (NYSE: DMB) Announces Dividend Business Wire NEW YORK -- May 4, 2021 BNY Mellon Municipal Bond Infrastructure Fund… Accessed Feb. 11, 2021. Government, and municipal bonds, that are not taxed federal taxes of debt securities or local to! A money market fund is a type of mutual fund that invests in high-quality short-term... Read that the municipal bond investors continues to stretch … What investors should expect from 2021 s... Products, such as municipal bonds to hedge their portfolio 's duration risk which receives. Denver and a convention center renovation in Chicago this has caused benchmark municipal yields to certain investors munis. Of risk 16, 2021 the payment of both principal and interest addition municipal bond funds 2021 municipal bonds debt! 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