Does Your Mutual Fund Belong to this Exclusive Club?

Author: Frank Holmes
Date Posted: February 29, 2016 Read time: 5 min

If you happen to have kids or grandkids who dream of becoming a professional athlete, I have some sobering news. We all know going pro is a long shot, but the truth is that only 1.7 percent of college...

If you happen to have kids or grandkids who dream of becoming a professional athlete, I have some sobering news. We all know going pro is a long shot, but the truth is that only 1.7 percent of college football players end up playing in the big leagues, according to the NCAA. For basketball players, that number falls to 1.2 percent. Less than that, 1 percent, get to play soccer professionally.

For every major sport, being drafted right out of high school has become all but impossible.

1.2% of college basketball players end up playing professionally
These stats, while disappointing to many, serve as a reminder of how fierce the competition is at this level. Very few make the cut. For every Stephen Curry or Lionel Messi, there are literally thousands who never come close to putting on the jersey. This exclusivity ensures that only the most talented and hardest working players rise to the top.

The same principles apply in the world of mutual funds. If you’re exploring funds purely on the basis of annual performance, it’s exceedingly rare to find one that consistently delivers positive returns year after year, in bull and bear markets, whether interest rates are rising or falling.

And yet it’s been done before. Among 31,306 equity and bond funds, only 39 have been positive for longer than 20 straight years, according to Morningstar data. That comes out to 0.12 percent, meaning the odds are better that any given NCAA athlete will turn pro.

The reason I bring this up is that one of our own funds, I’m proud to say, is a member of this highly exclusive club. For 21 consecutive years now, the Near-Term Tax Free Fund (NEARX) has delivered positive returns to its investors, no matter what interest rates were doing.

In Various interest Rate Environments, NEARX Has Had 21 Straight Years of Positive Returns
click to enlarge

What’s more, this two-decade timeframe includes extremely volatile periods such as the tech bubble, the financial crisis and the recent global selloff.

That’s taking performance to a whole new level.

We’ve managed to accomplish this by investing in high-quality, tax-free munis. Our portfolio team aims to invest in the “sweet spot” by looking for bonds with attractive yields and an average maturity of five years or less.

I think the fund is an attractive way to gain exposure to the $3.7 trillion (and growing!) muni market. Its turnover rate is low, and it has performed very well against its peers.

Although we can’t make promises or guarantees, we invite you to check out our track record. For a closer look, request an information packet today.




Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Foreside Fund Services, LLC, Distributor. U.S. Global Investors is the investment adviser.

Total Annualized Returns as of 12/31/2015
Fund One- Year Five-Year Ten-Year Gross
Near-Term Tax Free Fund (NEARX) 1.45% 2.34% 3.03% 1.08% 0.45%
S&P 500 Index 1.38% 12.57% 7.31% N/A N/A

Expense ratio as stated in the most recent prospectus. The expense cap is a contractual limit through April 30, 2016, for the Near-Term Tax Free Fund, on total fund operating expenses (exclusive of acquired fund fees and expenses, extraordinary expenses, taxes, brokerage commissions and interest). Performance data quoted above is historical. Past performance is no guarantee of future results. Results reflect the reinvestment of dividends and other earnings. For a portion of periods, the fund had expense limitations, without which returns would have been lower. Current performance may be higher or lower than the performance data quoted. The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Performance does not include the effect of any direct fees described in the fund’s prospectus which, if applicable, would lower your total returns. Performance quoted for periods of one year or less is cumulative and not annualized. Obtain performance data current to the most recent month-end at or 1-800-US-FUNDS.

Bond funds are subject to interest-rate risk; their value declines as interest rates rise. Though the Near-Term Tax Free Fund seeks minimal fluctuations in share price, it is subject to the risk that the credit quality of a portfolio holding could decline, as well as risk related to changes in the economic conditions of a state, region or issuer. These risks could cause the fund’s share price to decline. Tax-exempt income is federal income tax free. A portion of this income may be subject to state and local taxes and at times the alternative minimum tax. The Near-Term Tax Free Fund may invest up to 20% of its assets in securities that pay taxable interest. Income or fund distributions attributable to capital gains are usually subject to both state and federal income taxes.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.