An Income Opportunity for Investors Looking to Lower their Tax Bills and Reduce Risk in a Portfolio
|The Near-Term Tax Free Fund
is Highly Rated by Morningstar
Morningstar ratings and number of Municipal National
Short-term funds through 03/31/13
Most people think of municipal bonds as general obligation debt issued by a city, county or state. These are classic municipal bonds that are usually backed by the taxing ability of the government entity.
Revenue bonds are also municipal bonds, but the interest is paid by revenue from a specific project. Water and sewer fees, or electricity fees may support payment.
There are a number of variables that an investment manager considers when selecting municipal bonds.
As in every market, securities that carry more risk and have very slim debt service coverage—where revenue streams aren’t quite as secure—are the ones where fund managers will exercise caution.
For the Tax Free and Near-Term Tax Free funds, we apply a two-step approach in choosing municipal bonds. First we analyze various macroeconomic factors in an attempt to forecast interest rate movements, and then we position the portfolios by selecting investments that we believe fit that forecast.