Debt securities will always be the natural choice of the risk-averse investor because this category of instruments provides regular income flow at low levels of risk. Income from regular dividends helps to ease the pain caused by plunging stock prices. When considering safety of capital invested, municipal bond mutual funds are second only to those investing in government securities. In addition, the interest income earned form these securities are exempt from federal taxes and in many cases from state taxes as well.

Below we will share with you the 5 highest yielding Zacks #1 ranked municipal bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future.  To view the Zacks Rank and past performance of all municipal bond funds, investors can click here to see the complete list of funds.

Mutual Fund

Sec 30 Day Yield

Lord Abbett High Yield Municipal Bond A

6.12%

Oppenheimer AMT-Free Municipals A

5.91%

Nuveen High Yield Municipal Bond A

5.91%

Invesco Van Kampen High Yield Municipal A

5.68%

Invesco High Income Municipal A

5.12%
 
Lord Abbett High Yield Municipal Bond A (HYMAX) seeks high current income free from federal income taxes. The fund invests a large share of its assets in municipal bonds, the interest form which is not subject to federal income tax. The municipal bond mutual fund returned 13.7% in the last one year period.

The municipal bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.82% compared to a category average of 1.00%.

Oppenheimer AMT-Free Municipals A (OPTAX) primarily invests in municipal securities exempt from federal individual income tax. At least 25% of its assets are used to purchase securities below investment grade. The municipal bond mutual fund returned 24.67% in the last one year period.

The Fund Manager is Daniel G. Loughran and he has managed this municipal bond mutual fund since 2002.

Nuveen High Yield Municipal Bond A (NHMAX) seeks high current income free from federal income taxes. The fund invests the majority of its assets in municipal bonds. At least 65% of its assets are invested in bonds rated investment grade or lower. The municipal bond mutual fund returned 21.99% in the last one year period.

As of March 2012, this municipal bond mutual fund held 1552 issues, with 1.19% of its total assets invested in Tennessee Engy Acquisition C Jr R 5.625%.

Invesco Van Kampen High Yield Municipal A (ACTHX) invests a large proportion of its assets in municipal securities. The fund focuses on acquiring instruments of medium and low quality. The municipal bond mutual fund returned 17.22% in the last one year period.

The municipal bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.85% compared to a category average of 1.00%.

Invesco High Income Municipal A (AHMAX) seeks total return. The fund invests in a diversified portfolio of municipal securities. The majority of the fund's assets are invested in municipal bond securities that are rated BBB/Baa or lower by Standard & Poor's Ratings Services or other nationally renowned rating firms. The municipal bond mutual fund returned 16.5% in the last one year period.

The Fund Manager is Franklin Ruben and he has managed this municipal bond mutual fund since 1998.

To view the Zacks Rank and past performance of all municipal bond funds, investors can click here to see the complete list of funds.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds.


 
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