New York municipal bond mutual funds invest in municipal debt obligations of issuers from the state. It provides the state's investors stable income exempt from Federal and New York income tax. Meanwhile, municipal bonds, informally called “munis” are debt securities issued by state and local governments to borrow money. These are preferred by investors seeking a steady stream of tax free income in a choppy market. Munis come with lower yields compared to taxable bonds. However, they fetch better returns for investors in high tax brackets if we consider after-tax returns.
Below we share with you 3 top-rated New York muni bond mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and we expect the funds to outperform their peers in the future. To view the Zacks Rank and past performance of all muni bond mutual funds, investors can click here to see the complete list of muni bond funds .
Columbia New York Tax-Exempt A (COLNX – MF report) seeks total return through tax-exempted current income. COLNX invests the lion's share of its assets in municipal debt obligations that are expected to provide interest income free from income tax of New York and federal income tax, which also includes the federal alternative minimum tax. COLNX primarily emphasizes acquiring investment-grade municipal bonds or unrated securities of a similar quality. COLNX is a non-diversified fund. The Columbia New York Tax-Exempt A fund has returned 2.3% in the year-to-date frame.
Catherine M. Stienstra is the fund manager of COLNX since 2010.
BlackRock New York Municipal Opportunities Investor A1 (MDNKX – MF report) invests the major portion of its assets in New York municipal securities that provide return in the form of interest payment that are exempted from personal taxes of New York State and New York City. Returns from these securities are also free from federal income tax. MDNKX invests in securities that are rated investment grade. MDNKX invests in municipal securities including municipal notes, private activity bonds and insured municipal bonds. MDNKX is expected to maintain average portfolio duration between zero and 10 years. The BlackRock New York Municipal Opportunities Investor A1 fund has returned 1.6% in the year-to-date frame.
