Calculated Bets Pay Off for This Muni Fund

Beth Foos: MFS Municipal Income Fund is a strong choice for investors looking for tax-free income over the long term.

This fund is managed by a seasoned team that delivers solid returns at a very competitive price. Veteran manager Geoff Schechter has been running this portfolio since 2000. In July 2015, Jason Kosty moved over from the research team to become his comanager here, bringing with him roughly 20 years of industry experience. These two managers work closely with a team of dedicated muni analysts and traders to build this portfolio from the bottom up.

They focus on finding mispriced pockets of the muni market and strong security selection to add value for investors. That can result in the fund holding slightly larger weights in lower quality bonds than their typical rival, however, but they only add to these positions when they think the price is right.

More recently, the team has held notable positions in insured Puerto Rico bonds, which have added yield but can also add volatility. The team sees value in these bonds particularly because of their discounted prices and the security provided by bond insurance. Over time, bets like these have boosted returns and have served investors well.