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


Pioneer High Income Municipal A


5.56%


Oppenheimer Rochester National Municipals A


5.03%


Invesco Van Kampen High Yield Municipal A


5.01%


Lord Abbett High Yield Municipal Bond A


4.95%


Oppenheimer AMT-Free Municipals A


4.63%




Oppenheimer Rochester National Municipals A (ORNAX) seeks high current income not subject to federal income taxes. The fund primarily invests in a wide range of high-yield municipal securities. The municipal bond mutual fund returned 24.06% in the last one year period.
The Fund Manager is Daniel G. Loughran and he has managed this municipal bond mutual fund since 2001.



Nuveen High Yield Municipal Bond A (NHMAX) 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 25.30% in the last one year period.



As of December 2012, this municipal bond mutual fund held 1878 issues, with 0.97% of its total assets invested in Tennessee Engy Acquisition CJr R 6.25%.



Pioneer High Income Municipal A (PIMAX) seeks high total return. The fund invests in debt securities and related instruments issued by states, counties and municipalities as well as agencies of the US and the District of Columbia. The interest income from these securities must not be subject to federal income tax. The municipal bond mutual fund returned 21.27% in the last one year period.



The municipal bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.89% compared to a category average of 1.02%.



Oppenheimer AMT-Free Municipals A (OPTAX) invests in municipal securities exempt from federal individual income tax. The fund purchases securities regardless of their maturity period. The municipal bond mutual fund returned 24.90% in the last one year period.



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



Lord Abbett High Yield Municipal Bond A (HYMAX) seeks high income not subject to federal income taxes. The fund invests the majority of its assets in municipal bonds. A minimum of 50% of its assets must be utilized to purchase municipal bonds rated investment grade by a Nationally Recognized Statistical Organization (NRSRO). The municipal bond mutual fund returned 20.26% in the last one year period.



The municipal bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.80% compared to a category average of 1.02%.



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.


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