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On December 2010, Meredith Whitney who is a well known financial analyst predicted the Armageddon on Municipal bonds. She is the well known financial analyst who predicted the financial crisis on 2008-2009. For the past 6 month, she has been producing variety of reports about the dire situation of Municipal bonds. She predicted the muni market will experience 50 to 100 large defaults. This large default will represent hundreds of billions of dollars in losses over the next year. This first report is published on CBS 60 Minutes.

While this prediction is doom and gloom, the muni market has stabilized after several months of turbulences. During this time, the Muni bond fund has provided consistent income and capital appreciation for investors. What will future hold for Municipal bond fund? No one will know for sure. If you are interested in Muni bond fund, you should consider the following Top Rated Municipal bond fund, AllianceBernstein Diversified Municipal. Details can be found below.

AllianceBernstein Diversified Municipal (Ticker: SNDPX)

The AllianceBernstein Diversified Municipal fund objective is to provide principal safety and maximum total return after taking account of federal taxes. The fund invests most of assets (>80%) in municipal securities rated A or better by national rating agencies and comparably rated municipal notes. It invests <25% of assets in any one state. The fund seeks to maintain an effective duration of 3.5 to 7 years under normal market conditions.

SNDPX fund details

SNDPX Fund Details
  • Fund Inception Date: January 1989
  • Ticker Symbol: SNDPX
  • CUSIP: 085568400
  • Beta (3yr): 0.59
  • Rank in category (YTD): 5
  • Category: Muni Short
  • Distribution: 3.13%
  • Net Assets: $5.4 billion
  • Capital Gains: N/A
  • Number of Years Up: 20 years
  • Number of Years Down: 1 year
  • Average Duration:  3.82 years
  • Average Maturity: 4.45 years
updated on 6/22/2011

This top rated fund is managed by Terrance Hults since December 1995.  The minimum initial investment for brokerage account is $25,000 with no minimum subsequent investment. If you are interested to invest in this fund, there is no 12b1 fee and no sales-load fee as well. The last dividend distributed in May 2011. This AllianceBernstein fund currently has 3.13% dividend yield. The expense ratio of this fund is 0.56% per year. This expense ratio is lower than the average in the category which is 0.79%. 

The fund has returned 4.41% over the past three years and 4.38% over the past five years. The best 1-year total return was in 2000 with 7.78%, while the best 3-year total return was 6.66%. The worst 1-year total return was in 1999 with 0.52%, while the worst 3-year total return was 2.41%. SNDPX fund also received 5 stars rating from Morningstar for having outstanding performance (20 years with positive return and 1 year with negative return).

SNDPX can be purchased from a limited of 3 brokerages currently. They are Northwestern Mutual Investor Service LLC, Waddell & Reed Choice MAP Flex and Trade PMR Transaction Fee. This SNDPX is a no-load class of this fund. The other classes of this fund are Class A (Ticker: AIDAX), Class B (Ticker: AIDBX) and Class C (Ticker: AIMCX). Please note, these other classes may charge sales load and higher fees.

As of April 2011, this best muni bond fund has 663 holdings. The top sector/ industry breakdown are Electric Utility (14.60%), State G. O. (12.74%), Special Tax (10.33%), Tax-Supported State Lease (10.29%), Local G. O. (8.55%), Airport (7.20%), Revenue-Miscellaneous (6.29%) and Tax-Supported Local Lease (3.59%).

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