4 / 5 Stars
4 5 3 5 5
Zacks Investment Research
Standard & Poor's
5 / 5 Stars
#5 in Muni National Interm
U.S. News evaluated 82 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 0.67 percent over the past year, 5.20 percent over the past three years, 5.04 percent over the past five years, and 4.01 percent over the past decade.
|Trailing Returns||Updated 03.31.2014|
|Year to date||2.6%|
|3 Years (Annualized)||5.2%|
|5 Years (Annualized)||5.0%|
|10 Years (Annualized)||4.0%|
It is the paradox of markets that a focus on quality can be both a blessing and a curse. While Vanguard Intermediate-Term Tax-Exempt's attention to high credit ratings generally serves it well, it can lose out when riskier high-yield bonds are hot.
As of April 22, 2014, the fund has assets totaling $35.40 billion. Its portfolio consists primarily of tax-free municipal bonds.
The failure of firms like Lehman Brothers and the ensuing credit crunch hurt even conservative funds like Vanguard Intermediate-Term Tax-Exempt. Meanwhile, the fund was also been a bit sluggish during the rebound as investors looked with newfound favor at high-yield investments. The fund's management noticed this trend and picked up some longer-maturity holdings. Overall, though, this gigantic fund has put up respectable numbers recently and has done well despite some changes in its management. Christopher Ryon left the fund in 2007 after a 16-year stint as manager, and current manager Michael Kobs has been in charge only since 2008. The fund has returned 0.67 percent over the past year and 5.20 percent over the past three years.
Historically, the fund has boasted solid returns by keeping the vast majority of its assets in highly rated municipal bonds. It has stuck with this strategy in all market environments, making it a steady performer. In one of its annual report, the fund reiterated its traditional stance, saying, "As stock markets have tumbled, and even typically staid segments of the investment markets such as municipal securities have experienced high levels of volatility, the temptation to 'do something' has no doubt been strong. Our experience suggests that, more often than not, acting on such an emotional response is counterproductive." At the same time, the fund's ultra-low annual expense ratio of just 0.15 percent gives managers some room to play it safe. The fund has returned 5.04 percent over the past five years and 4.01 percent over the past decade.
The fund focuses more on income than some of its peers do. The average maturity for its bonds tends to be six to 12 years. "In unusual circumstances, however, such as apparent market turning points, management will go outside the normal maturity range," notes Value Line.
Role in Portfolio
Morningstar calls it a "core" investment.
Manager Michael Kobs takes a cautious approach, putting nearly all of the fund's assets in conservative investments. Morningstar says, "Michael Kobs is one of the newer members of Vanguard's team, but he is backed by veteran managers and several credit analysts who conduct research for the firm's muni fund lineup."
Vanguard Intermediate-Term Tax-Exempt Fund has an expense ratio of 0.20 percent.
The fund's conservative holdings generally make it a safe bet.