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%

Pioneer High Income Municipal A

6.12%

Oppenheimer AMT-Free Municipals A

5.91%

Invesco Van Kampen High Yield Municipal A

5.43%

Nuveen High Yield Municipal Bond A

5.30%
 
Oppenheimer Rochester National Municipals A (ORNAX) seeks high current income not subject to federal income taxes. The fund 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 16.64% 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 0.98%.

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 9.45% in the last one year period.

As of July 2012, this municipal bond mutual fund held 189 issues, with 2.28% 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. The municipal bond mutual fund returned 21.9% in the last one year period.

The Fund Manager is Daniel G. Loughran and he has managed this municipal bond mutual fund since 2002.

Invesco Van Kampen High Yield Municipal A (ACTHX) invests a large share of its assets in municipal bonds, the interest from which is not subject to federal income tax. A minimum of 75% of its assets are utilized to purchase municipal bonds of low quality. The municipal bond mutual fund returned 16.09% in the last one year period.

The municipal bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.85% compared to a category average of 0.98%.

Nuveen High Yield Municipal Bond A (NHMAX) seeks current income not subject to federal income taxes 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 20.51% 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 a http://www.zacks.com/funds.


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