Interest income exempt from federal income tax is among the many distinct advantages that municipal bonds offer to investors. They also show very little correlation with returns from equity investments. Thus, they offer relatively high yields at lower levels of risk and are considered second only to government securities in terms of safety of capital invested. By holding a well diversified portfolio of such securities, mutual funds significantly lower the associated default risk.

Below we will share with you the 5 highest yielding Zacks #1 ranked municipal bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future.  To view the Zacks Rank and past performance of all municipal bond funds, investors can click here to see the complete list of funds.

Mutual Fund

Sec 30 Day Yield

Oppenheimer Rochester National Municipals A

6.53%

Lord Abbett High Yield Municipal Bond A

6.12%

Pioneer High Income Municipal A

6.12%

Oppenheimer AMT-Free Municipals A

5.91%

Nuveen High Yield Municipal Bond A

5.71%
 
Oppenheimer Rochester National Municipals A (ORNAX) primarily invests in a wide range of high-yield municipal securities. All its assets may be utilized to purchase fixed-income securities of relatively lower quality which provide high yields. The municipal bond mutual fund returned 18.12% in the last one year period.

The municipal bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.64% compared to a category average of 1.00%.

Lord Abbett High Yield Municipal Bond A (HYMAX) seeks high current income free from federal income taxes. The fund invests a large share of its assets in municipal bonds, the interest form which is not subject to federal income tax. The municipal bond mutual fund returned 12.91% in the last one year period.

The Fund Manager is Peter Scott Smith and he has managed this municipal bond mutual fund since 2006.

Pioneer High Income Municipal A (PIMAX) invests in debt securities and related instruments issued by states, counties and municipalities as well as agencies of the US and the District of Columbia. The interest income from these securities must not be subject to federal income tax. The municipal bond mutual fund returned 8.4% in the last one year period.

As of April 2012, this municipal bond mutual fund held 180 issues, with 2.72% of its total assets invested in Illinois Fin Auth 8.125%.

Oppenheimer AMT-Free Municipals A (OPTAX) seeks high current income exempt from federal income taxes. The fund primarily invests in municipal securities exempt from federal individual income tax. Not more than 25% of its assets are utilized to purchase securities rated investment grade. The municipal bond mutual fund returned 23.17% in the last one year period.

The municipal bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.74% compared to a category average of 1.00%.

Nuveen High Yield Municipal Bond A (NHMAX) invests the majority of its assets in municipal bonds. At least 65% of its assets are invested in bonds rated investment grade or lower. The municipal bond mutual fund returned 20.71% in the last one year period.

The Fund Manager is John V. Miller and he has managed this municipal bond mutual fund since 2000.

To view the Zacks Rank and past performance of all municipal bond funds, investors can click here to see the complete list of funds.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds.


 
(HYMAX): ETF Research Reports
 
(NHMAX): ETF Research Reports
 
(OPTAX): ETF Research Reports
 
(ORNAX): ETF Research Reports
 
(PIMAX): ETF Research Reports
 
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