Tool

Tax-Exempt Income Portfolio

5/2016 from Income Investing

This recommended investment portfolio is one of 20+ mutual fund portfolios that we've assembled for investors with different time horizons and risk-tolerance levels to consider. Visit our Portfolio Finder to see them all.

 
View Another Investment Portfolio:

 

Tax-Exempt Income Portfolio

For when taxes really matter.
 100% Bonds | 


 Data through August 31, 2017

FUND NAME SYMBOL % OF
PORTFOLIO
YTD
RETURN
1-YR
RETURN
3-YR
RETURN
5-YR
RETURN
10-YR
RETURN
MAX LOAD EXPENSE RATIO
BondBaird Intermediate Municipal Bond InvestorBMBSX15%3.93%0.62%1.76%1.68%3.59%none%0.55%
BondFidelity Intmed Muni IncomeFLTMX154.360.722.522.523.91none0.35
BondT. Rowe Price Tax-Free Short-IntermediatePRFSX152.740.661.161.222.69none0.49
BondSchwab Tax-Free BondSWNTX154.570.632.632.574.42none0.49
BondUSAA Tax Exempt Long-TermUSTEX6.254.550.753.53.524.76none0.48
BondVanguard California Long-Term Tax-Ex InvVCITX6.255.840.394.094.174.83none0.19
BondVanguard Long-Term Tax-ExemptVWLTX6.255.50.723.993.854.87none0.19
BondWells Fargo Municipal Bond AWMFAX6.255.170.963.473.915.254.500.75
BondMarket Vectors Lehman AMT-Free Shrt MuniSMB152.970.811.121.07none0.2
   1004.10.692.322.323.42 0.4
** Closed to new investors. # Closed to new investors; other share classes are available.
r Maximum redemption fee charged when you sell shares. s Front-end load; redemption fee may apply.
— Fund has not existed for the specified time. Source: Morningstar, Inc..

If you're in the maximum federal income-tax bracket, municipal bonds are a no-brainer. A yield of 2.3% in tax-exempt interest beats a 4% in taxable interest for someone who faces the top federal rate of 43.4%.

But lower-income taxpayers should consider munis, too — they're sound, poular investments with excellent vital signs.

Our portfolio has a mix of 30% short-term funds, 45% intermediate-term bonds, and 25% long-term. We steer clear of "junk" munis.