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Looking for Municipal Bond Mutual Funds? 3 Best Choices

The debt securities category will always be the first choice for risk-averse investors because this class of instruments provides a regular income flow at low levels of risk. Income from regular dividends helps to ease the pain caused by plunging stock prices.

When considering the safety of capital invested, municipal bond mutual funds are second only to those investing in government securities. In addition, interest income earned from these securities is exempt from federal taxes and in many cases from state taxes as well.

Below we share with you three top-ranked municipal bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds .

MFS Municipal Income Fund AMFIAX seeks a high level of income free from federal income tax. MFIAX invests, under normal market conditions, a large chunk of its net assets in securities and other investments, whose interest is free from federal income tax. To meet this policy, MFIAX may invest in municipal instruments that finance projects related to education, housing, utilities, healthcare, water and sewers. MFS Municipal Income Fund A has returned 0.8% in the past year.

Jason Kosty is one of the fund managers of MFIAX since 2015.

MFS Municipal Limited Maturity Fund I MTLIX invests a major portion of its assets in securities and other investments whose interest is free from federal income tax. MTLIX's investment adviser generally invests in municipal instruments. The fund seeks high income free from federal income tax. MFS Municipal Limited Maturity Fund I has returned 0.1% in the last 12 months.

MTLIX has an expense ratio of 0.54% compared with the category average of 0.64%.

American High-Income Municipal Bond F-1 ABHFX seeks growth of income, which is free from regular federal income tax. ABHFX invests a large chunk of its assets in debt securities, interest from which is exempted from regular federal income tax. ABHFX may also invest more than one-half of its assets in debt securities rated Baa1 or lower or BBB+ or lower. American High-Income Municipal Bond F-1 has returned 2.4% in the past year.

As of September 2018, ABHFX held 2,210 issues, with 0.72% of its assets invested in BUCKEYE OHIO TOB SETTLEMENT FING AUTH 6.5%.

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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