First Investors Tax-Exempt II Fund (EIITX) Class A

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This next article you will find the fund review of First Investors Tax Exempt II fund which is one of national municipal bond mutual funds. If you want a tax free income, you should choose municipal bond. Using mutual fund, investors can diversify their investment in this muni bond.

First Investors Tax-Exempt II A (MUTF: EIITX)

The First Investors Tax Exempt II fund objective is to provide a high level of interest income exempt from federal income tax and the Alternative Minimum Tax. This fixed income fund typically invests only in high quality municipal securities that are rated as investment grade at the time of purchase. The fund will purchase bonds with maturities of 15 years or more.

First Investors Tax Exempt II
Fund Profile
  • Fund Inception Date: July 26, 1990
  • Ticker Symbol: EIITX
  • CUSIP: 30157P300
  • Beta (3yr): 1.27
  • Rank in category (YTD): 10%
  • Category: Muni National Interm
  • Yield: 3.59%
  • Capital Gains: 0%
  • Expense Ratio: 1.01%
  • Net Assets: $ 240.82 million
  • Number of Years Up: 18 years
  • Number of Years Down: 3 years
  • Annual Turnover Rate: 91%
Updated on 5/26/2012

This national municipal bond mutual fund has an expense ratio of 1.01% per year. This expense fee figure is higher than the average in the Muni National Interm category which is 0.83%. The 12b1 fee is 0.30%. This EIITX fund also has a sales charge of 5.75%. Its total net assets are $240.82 million. This intermediate term municipal fund was first introduced to public on July 26, 1990. The current fund manager is Clark D. Wagner. He has been managing it since July 1991. The dividend yield is 3.59%. The most recent dividend distributed to the investors is $0.05 on February 2012.

Top Diversified National Municipal Bond Mutual Funds 2012

Morningstar has ranked this fund with 3 stars rating. Its YTD return is 2.26%. The fund has recorded 18 years of positive return since its inception. The best 1-year total return was achieved in 2009 with 14.03%. The worst 1-year total return was occurred in 1999 with -1.91%. Based on the load adjusted returns, this muni bond fund has the following performance:
  • 1-year: 7.54%
  • 3-year: 5.81%
  • 5-year: 4.56%
  • 10-year: 5.18%
The minimum initial investment is $1,000 for brokerage account and $500 for IRA or retirement account. There is no minimum subsequent investment needed. The fund has 91.00% of annual holdings turnover as of March 13, 2012. The brokerages that provide the sale of this fund are JP Morgan, Edward Jones, Protected Investors of America, Pershing Fund Center, Firstrade, TD Ameritrade Retail, etc. The other class of this fund is Class B (EIIUX).

Fund Compositions

The top 5 sectors of this bond mutual fund as of April 2012 are Water / Sewer (15.3%), General Obligation (14.4%), Healthcare (13.7%), Other Tax (8.0%), and Lease (7.6%).

The largest holdings are Chicago Illinois Board Education Lease (4.3%), NYC Municipal Water Authority (4.1%), Metropolitan Atlanta Rapid Transit Authority Rev (2.5%), Superior WI Ltd Obligation Revenue (2.2%), New York St Form Auth Rev NYU (1.8%), Harris County Tax Rfdg Toll Rd Rev (1.6%), Atlanta GA Water & Wastewater Rev (1.6%), Michigan State Environmental Prog (1.6%), North Texas Twy Auth Rev (1.5%) and Austin Texas Utility Sys Rev (1.4%). These top ten holdings represent 22.6% of the total assets.

According to the fund’s website, the principal investment risks are: Interest Rate Risk, Credit Risk, Municipal Securities Risk, Liquidity Risk, Derivatives Risk, Tax Risk, etc.

Advantages and Disadvantages

Pros:
  • Income is tax free from federal tax rate
  • Good long term performance
Cons:
  • Fees are higher than average
  • Year 2010 is not its best performance (92% rank in its category)
Disclosure: No Position

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