Advertisement
Kip 25

A Deep Bench Bodes Well for Fidelity Intermediate Municipal Income

Another manager is retiring, but this fund is run by a dynamic team of mostly longtime members.

The last time we checked in with Fidelity Intermediate Municipal Income (symbol FLTMX), longtime manager Mark Sommer had just retired. Now, Kevin Ramundo, comanager since 2010, is retiring, too, in June. “I’m going to spend time hiking the Appalachian trail and skiing,” he says. Fund manager changes make us wary. But this fund is run by a team of mostly longtime members who follow a well-honed process.

The team, which includes comanagers Cormac Cullen, Michael Maka, Elizah McLaughlin and Ramundo, along with three traders and 20-odd analysts, discuss and debate every position in the fund. “While we don’t always agree,” says McLaughlin, “our fund decisions are fully vetted by the entire team.” They look for reasonably priced bonds with stable finances. Managing risk is a priority, too, and the team uses a proprietary tool to monitor the portfolio.

Advertisement - Article continues below

Municipal bonds, which pay interest that is exempt from federal and sometimes state income taxes, have had a great run in recent years. The 2017 tax law included changes specific to munis that crimped supply just as investors began to clamor for the bonds. “There’s an imbalance in supply and demand,” says Cullen, and that has helped prop up muni bond prices.

Advertisement
Advertisement - Article continues below

Over the past 12 months, Intermediate Muni Income returned 7.4%. That’s a solid absolute return for the fund. But it lags Bloom­berg Barclays Municipal index and the typical intermediate-term bond fund. Ramundo says low volatility has led to narrowing gaps in muni-fund returns. “The differences in performance among the top funds remain pretty tight,” he says.

But Intermediate Muni Income tends to shine in down markets. In 2013, the typical intermediate-term muni fund lost 2.3%; Fidelity Intermediate Muni Income beat 77% of its competition, with a 1.5% loss.

After strong performances two years in a row, the fund’s managers are cautiously optimistic. Munis are richly valued, says Cullen. But steady, low interest rates and a strong U.S. economy, coupled with strong demand for munis and tight supply, make it “reasonable to expect continued support for munis.”

Advertisement

Most Popular

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)
tax deadline

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)

Between due dates for IRA or HSA contributions, paying estimated taxes and other deadlines, there's more to do by July 15 than just filing your federa…
July 10, 2020
65 Best Dividend Stocks You Can Count On
stocks

65 Best Dividend Stocks You Can Count On

These 65 Dividend Aristocrats are an elite group of dividend stocks that have reliably increased their annual payouts every year for at least a quarte…
July 8, 2020
Know Why Your Credit Score Changes: 9 Money Moves to Consider
credit & debt

Know Why Your Credit Score Changes: 9 Money Moves to Consider

Your credit score is a key indicator of your financial well-being and of the risk you pose to lenders. How good is yours?
July 10, 2020

Recommended

13 Best Vanguard Funds for the Next Bull Market
mutual funds

13 Best Vanguard Funds for the Next Bull Market

Optimistic that the bounce since March is indeed the start of the next bull market? Here are the 13 best Vanguard funds to help you make the most of i…
July 7, 2020
15 Best Fidelity Funds for the Next Bull Market
mutual funds

15 Best Fidelity Funds for the Next Bull Market

Investors looking to squeeze more profit from the next bull run can look to Fidelity funds for strong active management and tactical investments.
July 7, 2020
10 Stocks to Invest in the Health Care Revolution
healthcare stocks

10 Stocks to Invest in the Health Care Revolution

These companies are fighting disease and improving our standard of care.
July 2, 2020
Cash In With This Gaming ETF
Technology

Cash In With This Gaming ETF

Cash in on the video gaming craze with this fund.
July 1, 2020