The debt securities category will always be the first choice for risk-averse investors, as this class of instruments provides a steady stream of income at low levels of risk. Regular dividend income helps ease the pain caused by falling stock prices.
When considering the safety of invested capital, municipal bond mutual funds come second only to those that invest in government securities. In addition, the interest income generated by these securities is exempt from federal taxes and, in many cases, state taxes as well.
Below, we share with you three top municipal bond funds, namely, AB Municipal Income Fund II Arizona Portfolio Class A AAZAX, Colorado Bond Shares A tax-exempt fund HICOX and AB Municipal Income Fund II Ohio Portfolio Class A AOHAX. Everyone has a Zacks Mutual Fund Ranking #1 (Strong Buy) and is expected to outperform its peers going forward. Investors can click here to see the complete list of municipal bond funds.
AB Municipal Income Fund II Arizona Portfolio Class A seeks to earn maximum current income exempt from income tax. AAZAX invests the majority of its net assets in high yield municipal securities, primarily investment grade.
AB Municipal Income Fund II Arizona Portfolio Class A has three-year annualized returns of 1.5%. AAZAX has an expense ratio of 0.78% compared to the category average of 0.83%.
Colorado Bond Shares A tax-exempt fund invests the majority of its net assets in tax-exempt bonds and other tax-exempt securities. HICOX generally attempts to invest all of its net assets as well as any borrowings for investment purposes.
Colorado bond stocks tax-exempt fund has three-year annualized returns of 2.7%. Fred R. Kelly Jr. has been a fund manager at HICOX since 1990.
AB Municipal Income Fund II Ohio Portfolio Class A invests the majority of its net assets in interest-bearing municipal securities, which are exempt from federal income tax or Ohio state income tax.
AB Municipal Income Fund II Ohio Portfolio Class A has three-year annualized returns of 1.9%. As of November 2021, AOHAX had 6.5% of its assets invested in CNTY OF HAMILTON OH SWR S.
To view the Zacks Ranking and past performance of all municipal bond funds, investors can click here to see the complete list of municipal bond funds.
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