3 / 5 Stars
5 5 4 4 1
Zacks Investment Research
Standard & Poor's
4 / 5 Stars
#13 in Muni National Interm
U.S. News evaluated 83 Muni National Interm Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
The fund has returned 5.13 percent over the past year, 4.53 percent over the past three years, 5.26 percent over the past five years, and 4.49 percent over the past decade.
|Trailing Returns||Updated 06.30.2014|
|Year to date||4.1%|
|3 Years (Annualized)||4.5%|
|5 Years (Annualized)||5.3%|
|10 Years (Annualized)||4.5%|
Schwab Tax-Free Bond has been a steady performer.
As of July 03, 2014, the fund has assets totaling almost $616.40 million invested in 507 different holdings. Its portfolio consists of municipal bonds (debt issued by state and local governments, as well as their agencies).
This municipal bond fund performed well during the turbulence of the credit crisis. In 2008, when the municipal bond market foundered, this fund managed to eke out a positive return. That feat is a testament to management's steady approach, which emphasizes bonds at the higher end of the credit spectrum. The fund continued its hot streak in 2009, tacking on close to 12 percent as the muni market stabilized and an injection of stimulus cash into state and local governments began to restore confidence. In the second half of 2009, the fund took a conservative approach. "[The] fund tended to favor high-quality revenue bonds, higher-rated hospital bonds, and securities in the essential services sector. The fund avoided land-based and tobacco bonds because of their higher credit risks," management said in the fund's semiannual report for the period ending in February 2010. Going forward, one of the bigger risks for the fund is rising interest rates and shaky state finances that roiled muni funds in late 2010. Rates, which are at historic lows, can only go up, and when that happens, bond prices will go down. The fund has returned 5.13 percent over the past year and 4.53 percent over the past three years.
Historically, the fund has done a fine job of achieving its goal: providing investors with steady income and tax advantages (muni investors traditionally do not need to pay federal income taxes on their interest). Since its 1992 inception, it has returned an impressive 5.6 percent on an annualized basis. In the process, it has had plenty of ups and downs. The fund's worst stretch, on a relative basis, was between 2005 and 2007. During that three-year stretch, the fund landed in the bottom third of Morningstar's intermediate-term national municipal bond category each year. Still, as of the end of October, the fund's trailing 10-year returns landed it in the top 4 percent of that very same category. The fund has returned 5.26 percent over the past five years and 4.49 percent over the past decade.
According to the fund's prospectus: "In choosing securities, [management] seeks to maximize current income within the limits of the fund's credit and average maturity standards. The investment adviser's credit research department analyzes and monitors the securities that the fund owns or is considering buying. The fund may invest up to 15% of its assets in below investment grade bonds (sometimes called junk bonds) that are rated, at the time of investment, at least B by at least one nationally recognized statistical rating organization or are the unrated equivalent as determined by the investment adviser."
Role in Portfolio
This fund could lend support to a well-balanced portfolio.
Kenneth Salinger and John Shelton manage the fund.
Schwab Tax-Free Bond Fund has an expense ratio of 0.49 percent.
Going forward, one of the bigger risks is rising interest rates. When interest rates go up, bond prices will fall.