Debt securities will always be the natural choice of the risk-averse investor because this category of instruments provides regular income flow at low levels of risk. Income from regular dividends helps to ease the pain caused by plunging stock prices. When considering safety of capital invested, municipal bond mutual funds are second only to those investing in government securities. In addition, the interest income earned form these securities are exempt from federal taxes and in many cases from state taxes as well.
Below we will share with you the 5 highest yielding Zacks #1 ranked municipal bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all municipal bond funds, then click here.
| Mutual Fund | SEC Yield |
| Pimco High Yield Municpal Bond A | 6.78% |
| Oppenheimer AMT-Free Municipal A | 6.68% |
| Nuveen High Yield Municpal Bond A | 6.67% |
| Pioneer High Income Municpal A | 6.58% |
| Invesco Van Kampen High Yield Municpal A | 5.94% |
PIMCO High Yield Municipal Bond A (PYMAX) invests the majority of its assets in debt securities exempt from federal income tax. The fund invests without limit in municipal bonds of high quality. The municipal bond mutual fund returned 16.18% in the last one year period.
The municipal bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.79% compared to a category average of 1.11%.
Oppenheimer AMT-Free Municipals A (OPTAX) seeks high current income free from federal income taxes. The fund primarily invests in municipal securities exempt from federal individual income tax. At least 25% of its assets are used to purchase securities below investment grade. The municipal bond mutual fund has a ten year annualized return of 2.29%.
The Fund Manager is Daniel G. Loughran and he has managed this municipal bond mutual fund since 2002.
Nuveen High Yield Municipal Bond A (NHMAX) invests the majority of its assets in municipal bonds. At least 65% of its assets are invested in bonds rated investment grade or lower. The municipal bond mutual fund returned 22.42% over the last one year period and has a ten year annualized return of 4.44%.
As of July 2010, this municipal bond mutual fund held 1367 issues, with 1.33% of its total assets invested in Tennessee Engy Acquisition C Jr R 5.625%.
Pioneer High Income Municipal A (PIMAX) seeks to maximize total return. The majority of its assets are invested in municipal debt securities. The interest income earned form these securities are exempt from regular federal income tax. The municipal bond mutual fund returned 25.16% in the last one year period.
The municipal bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.90% compared to a category average of 1.11%.
Invesco Van Kampen High Yield Municipal A (ACTHX) invests a large portion of its assets in medium and low grade municipal securities. Securities are selected only if the associated risk is reasonable with respect to the objectives of the fund. The municipal bond mutual fund returned 18.59% over the last one year period and has a five year annualized return of 2.82%.
The Fund Manager is James Phillips and he has managed this municipal bond mutual fund since 2002.
To view the Zacks Rank and past performance of all municipal bond funds, then click here.
About Zacks Mutual Fund Rank
By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds/mutualfund/
