Zacks
0
All posts from Zacks
Zacks in Our Research. Your Success.,

4 Best-Rated California Muni Bond Mutual Funds for Now

California municipal bond mutual funds seek tax-free stable income by investing in municipal debt obligations of issuers from the state. These mutual funds are expected to offer the state’s investors a Federal income tax and California state income tax exempted steady income. Moreover, municipal bonds or “munis” are preferred by investors seeking a steady stream of tax free income in a volatile market. Though munis come with lower yields than taxable bonds, they fetch better returns for investors in high tax brackets if we consider after-tax returns.

Below we share with you four top-rated California muni bond mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. To view the Zacks Rank and past performance of all muni bond mutual funds, investors can click here to see the complete list of muni bond funds .

T. Rowe Price California Tax-Free Bond (PRXCX) seeks high tax-free income. PRXCX invests a large share of its assets in debt securities that provide interest income free from federal and California state income taxes. The fund seeks high tax-exempted income through prudent portfolio management. T. Rowe Price CA Tax-Free Bond has a year-to-date return of 3%.

Konstantine B. Mallas is the fund manager of PRXCX since 2003.

Vanguard California Long-Term Tax-Exempt Investor (VCITX) invests the lion’s share of its assets in high-quality municipal bonds income free from federal and California state taxes. VCITX invests in sureties of California state and local governments and is expected to maintain average maturity duration of 10 to 25 years. Vanguard CA Long-Term Tax-Exempt Investor is a non-diversified fund and has a year-to-date return of nearly 3%.

VCITX has an expense ratio of 0.20% as compared to the category average of 0.89%.

Northern California Tax-Exempt (NCATX) seeks a high level of tax-exempted income. NCATX invests the majority of its assets in debt securities that are believed to offer returns that are exempted from California state personal income tax and regular federal income tax. Moreover, NCATX is expected to maintain dollar-weighted average maturity between 10 and 30 years. NCATX is a non-diversified fund and may also invest in securities that are rated below investment grade. Northern CA Tax-Exempt has a year-to-date return of 2.8%.

As of March 2016, NCATX held 86 issues, with 3.42% of its assets invested in California St Var Purp 5%.

American Century California Long-Term Tax Free Investor (BCLTX) invests a large chunk of its assets in debt securities that provide interest income free from federal and California income taxes. BCLTX invests in securities issued in California and U.S. territories, such as Puerto Rico. While BCLTX invests in securities having maturities more than seven years, it is expected to maintain a weighted average maturity of not less than 10 years. American Century California Long-Term Tax Free Investor has a year-to-date return of 2.6%.

BCLTX has an expense ratio of 0.47% as compared to the category average of 0.89%.

To view the Zacks Rank and past performance of all T. Rowe Price Mutual 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.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Get Your Free (PRXCX): Fund Analysis Report
 
Get Your Free (VCITX): Fund Analysis Report
 
Get Your Free (NCATX): Fund Analysis Report
 
Get Your Free (BCLTX): Fund Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research