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Mutual Fund News

June 2012 Municipal Bond and Tax Free Mutual Funds News

municipal bonds

This month saw more of news about financial market volatility. Tax day has come and past. The Month’s municipal bond news included:

  • 6/1/12: Vanguard Municipal-Bond Funds Try to Up Their Game. – Morningstar has new analysis on Vanguards Tax Free Muni Funds. They have good words to say and point to high securities quality without pressure to take extra risk in order to get a little more yield.
  • 6/14/12: Detroit Postpones $596 Million Water, Sewer Muni Bond Deal – Cities a political squabble that might drive Detroit into default.
  • 6/15/12: Muni-Bond Investors Should Thank Europe – Investors from around the world are buying United States Bonds. This has in turn helped drive up the value of Muni Bonds. Thank You World! The finances of many municipalities are better than Europes!
  • 6/25/12: The large US bank ratings downgrade – The biggest banks were recently downgraded by rating agencies. These banks back variable rate demand bonds. This type if municipal debt will probably get downgraded causing the value of it to fall. Watch out if you own any.
  • 6/29/12: Stockton, California declares Chapter 9 Bankrupcy – The biggest city in America to file bankrupcy is now Stockton. Their problems were caused by the forclosure prices and millions spent on civic improvement projects. They have tried to make ends meet by laying off police and other city employees. All payments will be suspended to bond holders.
  • 6/29/12: June and July are the peak months when municipal bonds mature. Approximatly, $90 billion will mature and most will need to be reinvested in new bonds. On average, only $24 billion in bonds gets issued every month. Because there is limited inventory, investors will be fighting against eachother for bonds. Becareful and do a lot of comparison shopping.
Municipal Bond Mutual Fund News

April 2012 Municipal Bond and Tax Free Mutual Funds News

municipal bonds

This month saw more of news about financial market volatility. Tax day has come and past. The Month’s municipal bond news included:

  • 4/17/12: EMMA – MSRB – Municipal Securities Rulemaking Board – Read the Official Statement of bonds and also use the new  EMMA System Alerts feature to stay up to date on any important disclosures.
  • 4/17/12: Safest Return Imperiled as Kansas Considers Tax Cut: Muni Credit – Bloomberg. Kansas and Oklahoma be affected by the proposals to cut income taxes. Both states have an AA+ rating from S&P.
  • 4/27/12: The Jefferson County legal battle is now moving towards resolving whether County Officials can divert money to fix a leaky sewer system instead of paying debtholders. This case will take years to resolve.
  • 4/27/12: New credit default swaps have been expanded for Municipal Bonds. This is increasing on trading volumes and could inject volatility into the bond market.
Municipal Bond Mutual Fund News

February 2012 Municipal Bond and Tax Free Mutual Funds News

municipal bonds

This month saw more of news about financial market volatility. The Month’s municipal bond news included:

Municipal Bond Mutual Fund News

January 2012 Municipal Bond and Tax Free Mutual Funds News

municipal bonds

This month saw more of news about financial market volatility. The Month’s municipal bond news included:

  • 1/19/12: Muni Risks are still here. (Smartmoney) – Eliminating tax breaks, Volcker rule, lower yields.
  • 1/20: Muni Bond Mutual funds saw a week of heavy inflows. (Bond Buyer)  Are investors chasing one of last years top performing categories? They put $5 billion into them in December 2011.
  • 1/31: Agencies Fading, but Bonds Live On – WSJ.com. Even though California redevelopment agencies are to be abolished, municipal bonds issues by them have gone up in value slightly. The reason for this is the lack of any new bond issuance. Scarcity is driving up prices.
Mutual Fund

Fidelity Municipal Bond Fund Analysis

Here are some Fidelity Municipal Bond Funds that we have researched for our portfolio. One major issue with Fidelity municipal bond mutual funds is that they can perform transactions that leverage returns. Leverage can magnify gains, but also intensified losses and volatility. During the credit crisis, the Fidelity funds family owned did not go crazy like some other municipal bond mutual funds. Also see Vanguard Municipal Bond Mutual Funds. Research done 1/12/2012

Also see: Morningstar’s favorite National intermediate term municipal bond fund picks and California intermediate term municipal bond fund picks.

Fidelity California Tax-free Bond funds

Fidelity California Short-Intermediate Term Tax Free Bond Fund (FCSTX)

Average maturity – years. Average duration 3.05 years. Average credit quality A. Expense ratio 0.34%. Morningstar rating 3 stars, Gold.

2011 return: 4.74%

Note: Reasonable duration and expense ratio. Vanguard doesn’t have a California municipal bond mutual fund with this short duration.

Fidelity California Municipal Income Fund (FCTFX)

Average maturity — years. Average duration 7.63 years. Average credit quality A. Expense ratio 0.46%. Morningstar rating 4 stars, Gold.

2011 return: 11.24%
Note: Too long of a duration and lower credit quality and we want.

Comparing Fidelity California tax-free municipal bond mutual funds. We can see the effect of longer duration net asset value fluctuations. The longer term fund does yield more though.

Fidelity National Tax-free Bond funds

Fidelity Short-Intermediate Muni Income Bond Fund (FSTFX)

Average maturity — years. Average duration 2.88 years. Average credit quality A. Expense ratio 0.48%. Morningstar rating 3 stars, Gold.

2011 return: 4.34%

Note: Reasonable duration but slightly high expense ratio. Vanguard doesn’t have a California municipal bond mutual fund with this short duration.

Fidelity Intermediate Municipal Income Fund (FLTMX)

Average maturity — years. Average duration 5.31 years. Average credit quality A. Expense ratio 0.39%. Morningstar rating 4 stars, Gold.

2011 return: 7.97%
Note: Too long of a duration and lower credit quality and we want.

Fidelity Municipal Income Fund (FHIGX)

Average maturity — years. Average duration 8.05 years. Average credit quality A. Expense ratio 0.46%. Morningstar rating 4 stars, Gold.

2011 return: 10.65%
Note: Too long of a duration and lower credit quality and we want.

Fidelity Municipal Income Fund (FTABX)

Average maturity — years. Average duration 8.08 years. Average credit quality A. Expense ratio 0.24%. Morningstar rating 5 stars, Gold.

2011 return: 10.91%

Note: Too long of a duration and lower credit quality and we want.

Comparing shorter term Fidelity national tax-free municipal bond mutual funds. We can see the effect of longer duration net asset value fluctuations. The longer term fund does yield more though. Fidelity Municipal Bond Funds remain some of the better muni bond funds investors should consider due to fairly low cost and decent performance.