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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 April 30, 2018

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%-1.47%-0.56%0.79%0.88%2.87%none%0.55%
BondFidelity Intmed Muni IncomeFLTMX15-1.331.31.671.823.42none0.36
BondT. Rowe Price Tax-Free Short-IntermediatePRFSX15-0.79-0.610.460.612.15none0.51
BondSchwab Tax-Free BondSWNTX15-1.360.871.591.813.99none0.49
BondUSAA Tax Exempt Long-TermUSTEX6.25-1.092.742.72.794.59none0.48
BondVanguard California Long-Term Tax-Ex InvVCITX6.25-1.892.452.883.214.52none0.19
BondVanguard Long-Term Tax-ExemptVWLTX6.25-1.812.322.873.024.47none0.19
BondWells Fargo Municipal Bond AWMFAX6.25-0.792.82.783.095.094.500.75
BondMarket Vectors Lehman AMT-Free Shrt MuniSMB15-0.53-0.590.510.532.13none0.2
   100-1.170.721.461.593.35 0.41
** 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.