Debt securities will always be the natural choice of the risk-averse investor because this category of instruments provides regular income flow at low levels of risk. Income from regular dividends helps to ease the pain caused by plunging stock prices. When considering safety of capital invested, municipal bond mutual funds are second only to those investing in government securities. In addition, the interest income earned form these securities are exempt from federal taxes and in many cases from state taxes as well.

Below we will share with you the 5 highest yielding Zacks #1 ranked municipal bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future.  To view the Zacks Rank and past performance of all municipal bond funds, investors can click here to see the complete list of funds.


Mutual Fund


Sec 30 Day Yield


Oppenheimer AMT-Free Municipals A


6.68%


MFS Municipal High-Income A


6.61%


Nuveen High Yield Municipal Bond A


5.91%


Invesco Van Kampen High Yield Municipal A


5.68%


Eaton Vance High-Yield Municipal Income A


5.39%
 
Oppenheimer AMT-Free Municipals A (OPTAX) seeks high current income free from federal income taxes. The fund primarily invests in municipal securities exempt from federal individual income tax. At least 25% of its assets are used to purchase securities below investment grade. The municipal bond mutual fund returned 24.04% in the last one year period.

 The municipal bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.74% compared to a category average of 1.02%.

MFS Municipal High-Income A (MMHYX) invests the majority of its assets in instruments not subject to federal income tax. It may invest substantially all of its assets in debt securities of low quality. The municipal bond mutual fund returned 16.66% in the last one year period.

The Fund Manager is Gary A. Lasman and he has managed this municipal bond mutual fund since 2006.

Nuveen High Yield Municipal Bond A (NHMAX) seeks high current income free from federal income taxes. The fund invests the majority of its assets in municipal bonds. At least 65% of its assets are invested in bonds rated investment grade or lower. The municipal bond mutual fund returned 20.27% in the last one year period.

As of December 2011, this municipal bond mutual fund held 1492 issues, with 1.37% of its total assets invested in Tennessee Engy Acquisition C Jr R 5.625%.

Invesco Van Kampen High Yield Municipal A (ACTHX) invests a large proportion of its assets in municipal securities. The fund focuses on acquiring instruments of medium and low quality. The municipal bond mutual fund returned 16.56% in the last one year period.
 
The municipal bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.76% compared to a category average of 1.02%.

 Eaton Vance High-Yield Municipal Income A (ETHYX) seeks high current income free from federal income taxes. The fund invests heavily in debt securities issued by the states of the US, the District of Columbia and related government agencies. The municipal bond mutual fund returned 18.42% in the last one year period.
 
The Fund Manager is Gary A. Lasman and he has managed this municipal bond mutual fund since 2006.

 To view the Zacks Rank and past performance of all municipal bond 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.


 
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