3 / 5 Stars
3 3 5 5 3
Zacks Investment Research
5 (Strong Sell)
Standard & Poor's
4 / 5 Stars
#11 in Muni National Short
U.S. News evaluated 50 Muni National Short 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 2.31 percent over the past year, 1.78 percent over the past three years, 2.39 percent over the past five years, and 2.84 percent over the past decade.
|Trailing Returns||Updated 06.30.2014|
|Year to date||1.3%|
|3 Years (Annualized)||1.8%|
|5 Years (Annualized)||2.4%|
|10 Years (Annualized)||2.8%|
Vanguard Limited-Term Tax-Exempt is a municipal bond fund with a solid track record.
As of July 03, 2014, the fund has assets totaling $18.77 billion. Its portfolio consists primarily of municipal bonds.
This municipal bond fund performed well during the turbulence of the credit crisis and continues to post consistent returns largely because of its steady, conservative strategy. In particular, the fund benefited as investors crowded the treasuries market. This saturation helped bring about a rare market phenomenon: Municipal bonds brought in significantly better post-tax yields than treasuries. The post-tax distinction is important since muni investors traditionally do not need to pay federal income taxes on their interest. Meanwhile, an injection of federal stimulus money into state and local governments helped restore some confidence in the muni market, which was shaken in 2008 when hedge funds sold off bonds for liquidity. Still, state and local governments continue to face daunting fiscal challenges and, more importantly, the possibility of higher interest rates will loom for some time to come. The fund has returned 2.31 percent over the past year and 1.78 percent over the past three years.
Historically, the fund has achieved strong returns with a conservative approach, and investors have benefited from its low fees. Combined with the tax incentives, the low expense ratio has helped investors maximize returns. Manager Marlin Brown has been at the helm only since 2008, when he took over from veteran Pam Wisehaupt-Tynan, but the transition has been smooth. The fund has returned 2.39 percent over the past five years and 2.84 percent over the past decade.
"The fund seeks to provide current income that is exempt from federal personal income taxes, with limited price volatility," according to its prospectus. It invests primarily in investment-grade municipal bonds, but it can also put up to 20 percent of its portfolio in junk bonds.
Role in Portfolio
Morningstar calls it a "core" investment.
Marlin Brown has been the fund's manager since 2008.
Vanguard Limited Term Tax Exempt Fund has an expense ratio of 0.20 percent.
The fund's conservative approach makes it a relatively safe bet, though the threat of rising interest rates from currently low levels will be an ongoing issue to watch.