What is a muni CEF?
These are 95 closed-end funds that focus on investment grade, non-taxable municipal bonds.
Is PMX tax-free?
Investing primarily in a portfolio of municipal bonds, the fund seeks to provide current income exempt from federal income tax. The fund may invest up to 20% of its total assets in investments the interest from which is subject to the federal alternative minimum tax.
Is CEF a good investment?
Closed-end funds are one of two major kinds of mutual funds, alongside open-end funds. Since closed-end funds are less popular, they have to try harder to win your affection. They can make a good investment — potentially even better than open-end funds — if you follow one simple rule: Always buy them at a discount.
How is the income from a CEF taxed?
Excluding a handful of exceptions, CEFs themselves do not pay taxes. To maintain tax-free status, a CEF must pass on to shareholders, generally speaking, roughly: 90% or more of net investment income from dividends and interest payments. 98% or more of net realized capital gains.
Are municipal bonds risk free?
Municipal bonds are good for people who want to hold on to capital while creating a tax-free income source. Buying municipal bonds is low-risk, but not risk-free, as the issuer could fail to make agreed-upon interest payments or be unable to repay the principal upon maturity.
Are closed-end muni funds safe?
The Risks. Of course, closed-end funds, or CEFs, are not without risk. The bonds in the portfolios typically come with interest coupons of 3% to 5%, and nearly all of the funds inflate those yields by using leverage.
Is Utg a good investment?
UTG yields 7% and is an undervalued investment with great returns potential.
What is a municipal bond mutual fund?
municipal bond fund. A mutual fund that invests in tax-exempt securities and passes through tax-free current income to its shareholders. Some municipal bond funds purchase long-term securities that provide a relatively high current yield but vary substantially in price with changes in interest rates.
What is high yield municipal bond fund?
High-yield municipal bond mutual funds provide an excellent opportunity for investors interested in deriving healthy tax-exempted returns. Funds that invest in municipal bonds, also known as ” munis “, seek to provide returns with a low level of risk by investing in municipal debt securities issued by state and local governments.
What is municipal bond market?
municipal bond market. Definition. Bonds issued by local government agencies to finance long term capital projects for the city or town. Most municipal bonds are issued with minimum denominations of $5,000, and consist of two main types: general obligation bonds and revenue bonds.