Video Reports

Embed this video

Copy Code

Link to this video

Get LinkEmbedLicenseRecommend (-)Print
Bookmark and Share

By Elizabeth Foos | 09-22-2015 12:00 AM

A Cautious Muni Fund for a Rocky Market

Gold-rated Fidelity Tax-Free Bond steers clear of leverage and volatile parts of the market, offering downside protection when the market heads south.

Beth Foos: Fidelity Tax-Free Bond (FTABX) is a solid choice for investors looking for exposure to a large national muni fund. This fund takes a relatively cautious approach, which offers downside protection in a rocky muni market.

But that's not all it has going for it: The fund's combination of a strong long-term record, low volatility rates, a well-resourced team, and super-low fees earn it a Morningstar Analyst Rating of Gold. 

At the core of this fund's appeal is its experienced team. Three portfolio managers--Kevin Ramundo, Jamie Pagliocco, and Mark Sommer--work together on more than 20 funds in Fidelity's muni lineup. They've been running this fund together since 2010. All three bring complementary skills to the mix: Ramundo came from credit research, Pagliocco came from trading, and Sommer came from quantitative research.

Despite some turnover in their analyst ranks, these managers are backed by a deep bench of analysts and dedicated muni traders that all use a sophisticated suite of tools to keep things running smoothly. The team runs a relatively high-quality portfolio, which steers clear of leverage and the market's most volatile names like tobacco and Puerto Rico.

As a result, the fund might not reach the heights of some of its more aggressive competitors. For example, it finished in the middle of the pack in 2014, as high-yield munis outperformed that year. But on the flip side, it does hold up relatively well when muni markets head south like they did in 2008 and 2013.

Over the longer haul, all of this has helped the fund to a strong long-term record. Its trailing 10-year annualized return of 4.6% beats nearly 85% of its peers in the muni-national long category. Its straightforward approach and solid results make this fund definitely worth considering for muni investors.

{1}
{1}
{2}
{0}-{1} of {2} Comments
{0}-{1} of {2} Comment
{1}
{5}
  • This post has been reported.
  • Comment removed for violation of Terms of Use ({0})
    Please create a username to comment on this article
    Username: