Best Municipal Bond Mutual Funds for 2013 and 2014 Investing

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Find best municipal bond mutual funds for 2013 & 2014 investing. Check the top rated muni bond mutual fund for financial review in brokerage or retirement account. This best municipal bond mutual fund provides tax free income.

Popular Municipal Bond Mutual Funds

Municipal bond mutual fund is part of fixed income mutual fund. This muni bond fund utilizes its assets to purchase high quality municipal bonds offered by states in U.S. The interest from this fund is tax free from federal income tax rate. It may be exempted from state or local tax as well. The total returns from this fund may be higher than other taxable bond fund, depending on your tax bracket.

These best municipal bond mutual funds for 2013 are selected based on its performance history and potential future performance. Some of these best muni bond funds don’t have a sales load and transaction fee. Some funds do have a sales load. The funds are ranked with 4 star rating or higher by Morningstar. You may find the fund review below and other fund information.
Best Municipal Bond Mutual Funds
Best Muni Bond Mutual Funds

Best municipal bond mutual funds for 2013 & 2014 are:
  1. Bernstein Diversified Municipal fund (SNDPX)
  2. USAA Tax Exempt Intermediate-Term fund (USATX)
  3. Wells Fargo Advantage Short Term Municipal Bond fund (STSMX)
  4. Vanguard High-Yield Tax-Exempt fund (VWAHX)
  5. T. Rowe Price Summit Municipal Income fund (PRINX)
  6. Wells Fargo Advantage Municipal Bond fund (SXFIX)
  7. Wells Fargo Advantage Intermediate Tax/AMT-Free fund (SIMBX)
  8. SEI Tax-Exempt Tax-Advantaged Income fund
  9. GuideMark Tax-Exempt Fixed Income fund
  10. BNY Mellon Municipal Opportunities fund
  11. American Funds Tax-Exempt Bond fund
  12. Vanguard Intermediate-Term Tax-Exempt fund
Updated on 4/5/2013

Bernstein Diversified Municipal (SNDPX)

Bernstein Diversified Municipal fund utilizes its assets to purchase a portfolio of high quality municipal securities. This best muni bond mutual fund is currently managed by a team of portfolio managers. They are R.B. Davidson III, Michael Brooks, Fred S. Cohen, Wayne Godlin and Terrance T. Hults.

This muni bond fund has $5.5 billion of total net assets. It requires a minimum initial investment of $25,000 for brokerage account. Investors of this fund receive a tax free dividend yield of 2.74%. The last distribution was given in February 19, 2013 with $0.03. The current share price is $14.74.

Best Municipal Bond Mutual Funds 2011

The year-to-date return of this fund is 0.48%. It is ranked with 5-stars and Bronze rating by Morningstar. US News also ranks it as one of the top municipal bond funds. It has an excellent performance with 22 years of positive return and only 1 year of negative return. Based on the load adjusted returns, the fund performance is listed as below:
  • 1-year: 2.01%
  • 3-year: 4.06%
  • 5-year: 4.03%
  • 10-year: 3.78%
The top holdings as of December 2012 are California State Department Water Resource Power (3.22%), Michigan Finance Authority (2.00%), Citizens Ppty Ins Corp Fla (1.56%), San Antonio Tex Elec & Gas Rev (1.06%) and Allegheny County Pa Hosp Dev Aut Rev Bond (0.93%).

USAA Tax Exempt Intermediate-Term Fund (USATX)

USAA Tax Exempt Intermediate-Term Fund
USAA fund
USAA Tax Exempt Intermediate-Term Fund objective is to provide tax free interest income from federal income tax. It has annual expense ratio of 0.54%. This expense fee is below category’s average. The fund’s total net assets are $3.4 billion. And it also has dividend yield of 3.64%. Morningstar rated this fund with 5-stars rating as well. The fund’s shares price is $13.73.

Since the inception in 1982, this USATX fund has achieved 27 years of positive return. It has its 1 year total returns in 2009 (18.28%). The worst 1 year return was occurred in 2008 with -7.33%. The fund has 0.99% of YTD return and 6.48% of 5-year annualized return. It has an average maturity of 9.13 years and an average duration of 4.4 years.

Top Performing Tax Free Municipal Bond Mutual Funds 2011

The top 5 holdings as of January 2013 are Harris County Tex Indl Dev Corp (1.33%), Il State Vr Go Ser (1.24%), California St (0.97%), Denver Colo Health & Hosp Ser A (0.95%) and Golden St Tobacco Securitization (0.91%).

Wells Fargo Advantage Short Term Municipal Bond Fund (STSMX)

Wells Fargo Advantage Short Term Municipal Bond Fund
Wells Fargo Advantage
Being one of the best municipal bond mutual funds of 2013, this Wells Fargo STSMX fund has 5-stars and Silver rating from Morningstar. It invests mainly in high quality municipal securities that pay interest exempt from federal income tax, but not necessarily federal alternative minimum tax (AMT). It has $5.3 billion total net assets. The yield is 1.33%. Its dividend is distributed monthly. The fund managers are Lyle J. Fitterer and Wendy Casetta.

These fund’s benchmarks are Barclays 1-and 3-year Composite Municipal Bond Index and Lipper Short Municipal Debt Funds Average. The best 1-year total return was achieved in 2009 with 10.43% and the worst in 2008 with -1.39%. The 3-year beta risk is 0.15. This best Wells Fargo mutual fund requires a minimum initial investment of $2,500 for brokerage account.

As of January 2013, the top holdings of this no load fund are Houston TX Utility Systems Revenue (1.76%), Indiana Health + Edl Fac Fing Insmed Adjustable Var (1.39%), Municipal Energy Acquisition Corporation PFOTER Tennessee Gas Project Series (1.37%), Illinois St Ils Adj Var (1.28%) and Suffolk County NY SFK Fixed (1.07%).

Vanguard High-Yield Tax-Exempt Fund (VWAHX)

Vanguard High-Yield Tax-Exempt Fund uses its assets to buy investment-grade municipal bonds. It has large assets of $8.1 billion. Mathew M. Kiselak is the current portfolio manager. The annual expense ratio is a low 0.20%. This muni bond fund has a high yield of 3.70%. The annual holdings turnover as of February 14, 2013 is 20.00%. The fund’s NAV is $11.25.

In 2013, this top muni bond fund has YTD return of 1.04%. Morningstar ranks it with Silver and 5-stars rating. Based on the load adjusted returns, the fund has returned 7.03% over the past 1-year, 5.87% over the past 5-year and 5.40% over the past decade. The fund has average maturity of 6.6 years and average duration of 6.1 years. As of January 2013, it has a total of 1072 bonds.

T. Rowe Price Summit Municipal Income Fund
PRINX fund
T. Rowe Price Summit Municipal Income Fund (PRINX)

Managed by Konstantine B. Mallas, this T. Rowe Price Summit Municipal Income Fund invests majority of its assets in high quality municipal bonds. This PRINX fund is part of Muni National Long mutual fund. It has below average expense ratio of 0.50% per year. The total assets are $848.4 million only. This no load muni bond fund has a high yield of 3.68%. The fund has low annual holdings turnover of 9.50%.

This best tax free municipal bond mutual fund has 5-stars rating from Morningstar with a record of 16 years of positive return and 3 years of negative return. The fund has 1.08% year-to-date return. It is a no load fund, so there is no management fee and no front-end sales load fee. It can be purchased from 73 brokerages.

The top 10 largest holdings (as of January 2013) represent 10.30% of total net assets. They are CLARK CO NV ARPT B, CT ST HEFA REV STAMFORD HOSP SR J, LWR CO RVR TX REV AUTH SR A, MD ST TRANS AUTH BWI ARPT PRJ AMT SR B, etc. In this fund, 94.9% of the total net assets are allocated in Domestic Bond and the remaining 5.1% in Cash.

Wells Fargo Advantage Municipal Bond Fund (SXFIX)

Wells Fargo Advantage Municipal Bond Fund utilizes its assets to buy a portfolio of municipal securities that pay interest exempt from federal income tax. It is managed by Lyle J. Fitterer and Robert J. Miller. This Wells Fargo Advantage fund has 5-stars rating from Morningstar. The total net assets are $3.2 billion. It also has 0.78% of annual expense ratio. The benchmark of this fund is Barclays Municipal Bond Index.

The fund has been in the market for over 25 years since 1986. The best 1-year total return within 22 years of positive return was in 2009 with 24.40%. Based on the load adjusted returns, the fund has returned 6.71% over the past 5-years and 6.46% over the past 10-years.

The top holdings are Puttable Floating Option Tax E Putgen Adjustable Var (1.89%), Puerto Rico Electric Revenue P-Float (1.80%), New Jersey State Econ Dev Auth (1.55%) and Puerto Rico Sales Tax Financing Corporation (1.47%). As of January 2013, it has 735 of total securities with 64.61% of turnover rate.

Muni Bond Mutual Fund Information


NoFund DescriptionTickerRatingExpense RatioYieldNet Assets (mil) Min Invest
1Bernstein Diversified MunicipalSNDPX50.562.745,500 25,000
2USAA Tax Exempt Intermediate-TermUSATX50.543.643,400 3,000
3Wells Fargo Advantage S/T Muni Bd InvSTSMX50.631.335,300 2,500
4Vanguard High-Yield Tax-ExemptVWAHX50.23.78,100 3,000
5T. Rowe Price Summit Municipal IncPRINX50.53.68849 25,000
6Wells Fargo Advantage Municipal Bond InvSXFIX50.782.743,200 2,500
7Wells Fargo Advantage Interm T/AmtF InvSIMBX50.732.532,000 2,500
8SEI Tax-Exempt Tax-Advantaged Income ASEATX50.874.11523 100,000
9GuideMark Tax-Exempt Fixed Inc ServiceGMTEX51.292.8876 -
10BNY Mellon Municipal Opportunities InvMOTIX50.933.14991 10,000
11American Funds Tax-Exempt Bond AAFTEX40.553.4810,100 250
12Vanguard Interm-Term Tx-Ex InvVWITX40.23.0438,800 3,000
13Fidelity Municipal IncomeFHIGX40.463.526,800 10,000
14Fidelity Intermediate Municipal IncomeFLTMX40.42.845,200 10,000
15Western Asset Managed Municipals ASHMMX40.653.845,800 1,000
16Fidelity Short-Intermediate Muni IncomeFSTFX40.481.734,400 10,000
17USAA Tax Exempt Long-TermUSTEX40.523.892,900 3,000
18Fidelity Tax-Free BondFTABX40.253.472,500 25,000
19DWS Managed Municipal Bonds ASMLAX40.764.045,700 1,000
20T. Rowe Price Summit Municipal IntmPRSMX40.52.852,400 25,000
21Lord Abbett Intermediate Tax Free ALISAX40.662.814,300 1,000
22Thornburg Limited-Term Muni ALTMFX40.721.956,500 5,000
23USAA Tax Exempt Short-TermUSSTX40.552.082,200 3,000
24BlackRock National Municipal Inv AMDNLX40.723.635,400 1,000
25T. Rowe Price Tax-Free Shrt-IntermPRFSX40.51.712,000 2,500

Municipal Bond Mutual Fund Performance


NoFund DescriptionTickerYTD return1-Year Return %3-Year Return %5-Year Return %10-Year Return %
1Bernstein Diversified MunicipalSNDPX0.482.413.94.473.71
2USAA Tax Exempt Intermediate-TermUSATX0.995.876.466.484.84
3Wells Fargo Advantage S/T Muni Bd InvSTSMX0.371.762.513.463.37
4Vanguard High-Yield Tax-ExemptVWAHX1.047.217.366.685.34
5T. Rowe Price Summit Municipal IncPRINX1.087.437.376.975.41
6Wells Fargo Advantage Municipal Bond InvSXFIX1.187.327.727.456.37
7Wells Fargo Advantage Interm T/AmtF InvSIMBX0.84.996.055.884.99
8SEI Tax-Exempt Tax-Advantaged Income ASEATX1.2311.178.567.16N/A
9GuideMark Tax-Exempt Fixed Inc ServiceGMTEX0.264.465.525.483.56
10BNY Mellon Municipal Opportunities InvMOTIX1.247.888.07N/AN/A
11American Funds Tax-Exempt Bond AAFTEX0.96.76.776.144.73
12Vanguard Interm-Term Tx-Ex InvVWITX0.744.315.515.834.52
13Fidelity Municipal IncomeFHIGX0.635.956.726.315.05
14Fidelity Intermediate Municipal IncomeFLTMX0.553.954.885.174.41
15Western Asset Managed Municipals ASHMMX1.077.227.417.285.79
16Fidelity Short-Intermediate Muni IncomeFSTFX0.391.72.673.423.05
17USAA Tax Exempt Long-TermUSTEX1.117.297.656.855.15
18Fidelity Tax-Free BondFTABX0.656.26.766.615.28
19DWS Managed Municipal Bonds ASMLAX1.146.836.696.725.04
20T. Rowe Price Summit Municipal IntmPRSMX0.874.25.255.714.48
21Lord Abbett Intermediate Tax Free ALISAX0.795.036.126.5N/A
22Thornburg Limited-Term Muni ALTMFX0.622.493.974.63.52
23USAA Tax Exempt Short-TermUSSTX0.412.083.023.553.07
24BlackRock National Municipal Inv AMDNLX1.186.947.866.825.33
25T. Rowe Price Tax-Free Shrt-IntermPRFSX0.791.932.883.813.16