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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.

 
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Tax-Exempt Income Portfolio

For when taxes really matter.
 100% Bonds | 


 Data through March 31, 2019

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%2.18%4.11%1.38%1.98%2.7%none%0.55%
BondFidelity Intmed Muni IncomeFLTMX152.64.792.332.933.67none0.37
BondT. Rowe Price Tax-Free Short-IntermediatePRFSX151.493.011.121.292.11none0.51
BondSchwab Tax-Free BondSWNTX152.444.321.942.894.07none0.49
BondUSAA Tax Exempt Long-TermUSTEX6.252.794.372.823.835.84none0.47
BondVanguard California Long-Term Tax-Ex InvVCITX6.253.015.272.834.365.45none0.17
BondVanguard Long-Term Tax-ExemptVWLTX6.253.145.543.034.355.21none0.17
BondWells Fargo Municipal Bond AWMFAX6.252.815.283.154.036.274.500.75
BondMarket Vectors Lehman AMT-Free Shrt MuniSMB151.593.381.211.272.04none0.2
   1002.294.231.952.583.63 0.42
** 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.