Municipal bonds have proved to be a good place to take cover in turbulent markets. Year-to-date through February 6, Fidelity Intermediate Municipal Income (symbol FLTMX gained 3.1%, and it's the only fund in the Kiplinger 25 with a positive one-year return.
Intermediate Muni Income, steered by Mark Sommer, is sticking with high-quality bonds. At last report, more than 80% of the fund's 910-bond portfolio was in debt rated single-A or higher. Sommer has a fondness for tobacco-settlement bonds, state and local government-backed issues, essential-service (such as water and education) and health-care bonds. The fund, whose average maturity is a bit less than eight years, yields 3.2%. That's equivalent to 5% for taxpayers in the 35% federal tax bracket.
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