investing

Changes Happening at Fidelity Intermediate Municipal Income Fund

The veteran manager of this Kiplinger 25 fund has retired, but the new leaders have proven ready since taking the reins last year.

A changing of the guard took place recently at Fidelity Intermediate Municipal Income fund (FLTMX), a member of the Kiplinger 25, the collection of our favorite actively-managed mutual funds. After nearly 13 years as lead manager, Fidelity veteran Mark Sommer retired in 2018. “It has been a wonderful job. But life is short. I have other things I’d like to do,” said Sommer, who is in his late fifties.

Shareholders need not worry about an abrupt transition at Intermediate Muni Income. Kevin Ramundo, a comanager of the fund since mid 2010, is stepping up as lead manager. He’ll have help from Cormac Cullen, a comanager since 2016, and newly named comanager Elizah McLaughlin.

Overall, the past 12 months have been good for municipal bonds, which pay interest that is exempt from federal and sometimes state income taxes. One boost came from the new tax law, which helped to crimp the supply of muni bonds, putting upward pressure on prices. At the same time, new caps on state and local tax deductions made munis more attractive to investors who live in high-tax states.

Muni bonds have done well, on average, compared with other sectors of the bond market. The typical intermediate-term bond fund, for instance, gained 2.8% over the past 12 months; high-yield bond funds climbed 2.7%. Intermediate Muni Income returned 3.6%, beating the 3.3% gain of the typical medium-maturity muni fund.

Fidelity’s muni-bond pickers work in Merrimack, N.H., rather than in the firm’s Boston headquarters, and the structure of the space complements the collaborative culture of the team. Ramundo, Cullen and McLaughlin favor reasonably priced bonds with stable finances. Managing risk is a priority, and the team uses a proprietary tool to monitor the portfolio.

Over time, that has helped the fund hold up better in down markets. Though Intermediate Muni Income’s 10-year annualized return lags its peer group a smidge—an average of 0.4 percentage points per year—the fund has done a better job over the past decade of delivering more return for the risk it takes on than its peers or its benchmark, the Bloomberg Barclays Municipal index.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
How to Know When You Can Retire
retirement

How to Know When You Can Retire

You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually …
January 5, 2022
The 10 Best Closed-End Funds (CEFs) for 2022
CEFs

The 10 Best Closed-End Funds (CEFs) for 2022

These high-yielding CEFs won't just significantly boost your portfolio income. They'll also allow you to buy their underlying stocks and bonds at a di…
January 12, 2022

Recommended

Could the Stock Market Crash for Real? Here’s How to Prepare
investing

Could the Stock Market Crash for Real? Here’s How to Prepare

After a long march to record heights, the stock market tripped into correction territory in January. How should you react? Thoughtfully.
January 25, 2022
The 60/40 Portfolio Is Dead. Long Live 33/33/33.
investing

The 60/40 Portfolio Is Dead. Long Live 33/33/33.

A portfolio of stocks and bonds used to be the gold standard, but it just doesn’t cut it anymore. It’s time to throw some alternative investments into…
January 25, 2022
8 Facts You Need to Know About Stock Market Corrections
Markets

8 Facts You Need to Know About Stock Market Corrections

Scary as they are, drawdowns are a normal part of the investing process. Having a financial plan in place and sticking to it is every investor's best …
January 23, 2022
Is the Stock Market Closed on MLK Day?
Markets

Is the Stock Market Closed on MLK Day?

Both the stock markets and bond markets will have Monday off as the nation honors civil rights leader Martin Luther King Jr.
January 15, 2022