Municipal bond fund

(redirected from Municipal Bond Funds)

Municipal bond fund

A mutual fund that invests in bonds issued by state, city, and/or local governments. The interest obtained from these bonds is passed through to shareholders and is generally free of federal (and sometimes state and local) income taxes.

Municipal Bond Fund

A mutual fund that invests predominantly or exclusively in municipal bonds. A municipal bond fund is often tax-efficient, as municipal bonds are exempt from federal taxes and in some circumstances also from state and local taxes. As a result, municipal bond funds tend to be attractive to persons who fall into higher tax brackets. Municipal bond funds generally carry lower risks than mutual funds investing primarily in stocks, but the levels of risk vary according to the credit ratings of the municipalities whose bonds are represented in the fund.

municipal bond fund

A mutual fund that invests in tax-exempt securities and passes through tax-free current income to its shareholders. Some municipal bond funds purchase long-term securities that provide a relatively high current yield but vary substantially in price with changes in interest rates. Other funds choose short-term securities that have lower yields but fluctuate little in value. Municipal bond funds differ from municipal bond unit trusts in that the funds manage the bond portfolios and charge an annual management fee. See also double-exempt fund, junk muni-bond fund, tax-exempt money market fund.

Municipal bond fund.

Municipal bond funds invest in municipal bonds. Interest earnings from these funds are free from federal income tax but may be subject to the alternative minimum tax (AMT).

In addition, some mutual fund companies offer funds that invest exclusively in municipal bonds offered by a single state.

One advantage of muni bond funds is that buyers can invest a much smaller amount than they would need to buy a municipal bond on their own. Another advantage is that they pay income monthly rather than semiannually.

References in periodicals archive ?
BANKING AND CREDIT NEWS-September 3, 2019-BNY Mellon declares distributions on closed-end municipal bond funds
M2 EQUITYBITES-September 3, 2019-BNY Mellon declares distributions on closed-end municipal bond funds
Global Banking News-September 3, 2019-BNY Mellon declares distributions on closed-end municipal bond funds
However, tax-exempt interest from municipal bonds is not subject to the additional tax, so conservative investors looking to maximize after-tax return should consider increasing exposure to municipal bonds or municipal bond funds. On top of the favorable tax treatment, municipal bonds currently offer a tremendous amount of value when compared to other fixed income options.
They attracted more than $178 billion in inflows -- led by intermediate term and ultra short bond funds -- while actively managed municipal bond funds had inflows of $28 billion.
With more than 30 years in the financial services industry, Loughran has served as Team Leader of Rochesters investment team since 2006 and managed the Rochester municipal bond funds for more than 20 years.
The announcement means certain bondholders, including hedge funds and municipal bond funds, could see significant cuts to their expected returns, opening the way for a fight in the courts over the definition of essential services the government wants to fund by clawing back repayment and interest owed to lenders.
Some municipal bond funds have low expenses and strong track records.
Municipal bond funds captured another $1.3 billion of inflows.
According to Oppenheimer, the ruling represents good news for investors in municipal bonds and municipal bond funds. The act would have allowed the island's electric authority, highway authority and aqueduct and sewer authority to restructure their debt, the company said in a statement.
The complaints allege that UBS provided unsuitable recommendations to investors and recommended concentrated investments in Puerto Rico leveraged municipal bond funds with high risk holdings.
Since the start of 2009, funds invested in junk bonds have returned an average 14 percent each year and municipal bond funds 6 percent, according to the Investment Company Institute, double their averages in the prior six years.

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