This week’s (January 10-14, 2011) saw the downdraft come back into the market after the holidays. Falling prices in Municipal bond Mutual Funds, especially longer duration issues. This week municipal bond news included:
- Fed Chairman Bernanke stated that they will not bailout states. “We have no expectation or intention to get involved in state and local finance,” Mr. Bernanke said in testimony before the Senate Budget Committee. The states, he said later, “should not expect loans from the Fed.” (WSJ)
- Illinois passed a 67% increase in state income tax and a 45% increase in corporate tax. Exactly what other states need to do also! (WSJ)
- Vanguard aborted its municipal bond ETF launch, citing market volatility and probably demand.
Municipal Bond Mutual Fund Weekly Price Movement
Vanguard Short Term Tax-Exempt Fund (VWSTX) -0.06% for the week.
Month to date: -0.06% December -0.14%. Current Yield 0.83%.
Average maturity 1.3 years – Average Duration: 1.2 Years – Average Credit quality: AA. Exp Ratio: 0.20% Morningstar Rating: 3 Star
Fidelity Short-Intermediate Muni Income Bond Fund (FSTFX) -0.19% for the week.
Month to date: -0.19%. December -0.63%. Current Yield 1.67%.
Average maturity years – Average Duration: 2.7 Years – Average Credit quality: AA-. Exp Ratio: 0.50% Morningstar Rating: 4 Star
Fidelity Intermediate term municipal bond fund (FCSTX) -0.09% for the week.
Month to date: -0.09%. December -0.64%. Current Yield 1.74%.
Average maturity 3.3 years. Average duration 3.1 years. Average credit quality AA. Expense ratio 0.35%. Morningstar rating 4 stars.
Vanguard California intermediate term municipal bond fund (VCAIX) -1.00% for the week. Month to date: -1.20% December -1.69%. Current Yield 3.47%.
Average maturity 6.3 years. Average duration 5.8 years. Average credit quality A. Expense ratio 0.20%. Morningstar rating 4 stars.
See how the Fidelity intermediate term municipal bond fund (FCSTX) and Vanguard California intermediate term municipal bond fund (VCAIX) performed this week on this graph:
See how the municipal bond mutual funds we listed above performed this month on this graph: