Sooner or later, every market and growth trend turns. There’s little sign of growth slowing, but equities are in the ninth year of a bull market.
Naturally, as we enter what could be the late stages of the current market and economic cycle, many investors are wondering what to do about their core fixed income allocation.
Think core means only Treasuries and high-quality corporate bonds? Think again.
For any investor who is a taxpayer, a core muni bond portfolio can offer a compelling combination of favorable tax-advantaged income potential and low equity correlation.
Seek Higher Income. Don’t Sacrifice Diversification.
One way that some core fixed income funds may try to boost income and returns is by heavily investing in taxable high-yield bonds — but that may leave them highly correlated to equities.
Why are municipal bond funds different? Because — almost regardless of credit quality — muni bonds have typically offered tax-advantaged income with low correlations to equities.
Attractive Tax-Advantaged Income, Powerful Diversification
Yields (12-month distribution rates) and correlations as of 9/30/17*
Considering Munis? Top-Quintile Five-Year Results Should Appeal.
The Tax-Exempt Bond Fund of America, American High-Income Municipal Bond Fund and Limited Term Tax-Exempt Bond Fund of America each placed in the top quintiles of their respective Morningstar categories. Rankings based on average annual returns for the 5-year period ended 9/30/17 (F-2 share class).
Categories and total number of funds included are: Muni National Intermediate (221), High-Yield Muni (118) and Muni National Short (149), respectively.
To learn more about our municipal bond funds, call us at
The Tax-Exempt Bond Fund of America®
F-2 Shares: TEAFX
American High-Income Municipal Bond Fund®
F-2 shares: AHMFX
Limited Term Tax-Exempt Bond Fund of America®
F-2 shares: LTEFX
The Tax-Exempt Bond Fund of America