North Carolina Municipal
  • North Carolina municipal debt can be tax exempt on more than one level, and at times may be exempt from three different income taxes
  • Municipal debt funds invest in municipal bond debt to offer tax advantages to investors
  • The best no load funds offer the most benefits to the investor, while keeping fees and expenses to a minimum

North Carolina municipal debt offers unique investment and tax advantages for residents of this state. Municipal bond debt is issued by a municipal entity, such as a state or city, and the funds raised are used for improvements and other public projects which benefit the residents. Municipal debt funds can offer tax exemptions from federal and possibly state income taxes, and many times local income taxes as well. These funds invest mainly in municipal debt to offer the maximum tax benefits to investors. One of the best no load funds in this category is the Dupree NC Tax Free Income Fund, which has the ticker symbol NTFIX. This North Carolina municipal debt fund is offered by the Dupree family of funds, and Morningstar has rated it with four stars. The fund has over sixty million dollars in net assets, and has been in operation for close to fifteen years already. The fund manager, Vincent Harrison, has been managing investments since 1999, and the fund has a sound performance history. The Dupree NC Tax Free Income Fund has a very low minimum investment required, at only one hundred dollars needed.

Another North Carolina fund that is considered one of the best no load funds available is the Columbia NC Interm Muni Bond Z, with a symbol of NNIBX for trading. This municipal bond debt mutual fund also offers tax exemptions and advantages for investors who live in the state, and the fund has net assets which total more than one hundred and fifty million dollars. The Morningstar rating on this specific fund is only three stars, and some experts urge caution and a thorough evaluation, to ensure that this fund is right for you before investing. The fund was started in 1992, so there is plenty of history and data available. This fund requires an initial investment amount of at least twenty five hundred dollars, but there are no load fees or 12b-1 marketing fees charged and the total fund expense ratio is only one half of one percent. Columbia offers this as one of their family of mutual funds, and this is one of the municipal debt funds that should be considered by North Carolina investors. Choosing no load funds can help significantly cut down on fund expenses, which means that you will see higher returns as a result, as well as a higher investment value.

For institutions, the BB&T NC Intermediate Tax-Free I Fund, which trades under the ticker symbol BBNTX, may be the right North Carolina municipal debt fund. The difference between institutional mutual funds and those aimed at individual investors is the lower fund operating expenses and the much higher investment amounts required to invest in institutional funds. The BB&T NC Intermediate Tax-Free I Fund has net assets worth close to one hundred and twenty million dollars, and it invests mainly in investment grade North Carolina municipal debt. This fund does have a disadvantage though, and that is that the investments held in the portfolio are not widely diversified, and diversification is recommended for most investors to protect against large devastating losses if one sector or market falls or performs badly. Most municipal debt funds have this same disadvantage, because municipal bond debt investments are normally made for the tax exemption benefits and are considered relatively safe and stable, with returns that are connected to the risks involved. North Carolina municipal debt no load funds can be double or triple tax exempt, depending on where the investor lives in the state and the municipal entity that issues the municipal debt invested in. If you live in the municipality that issues the debt, it is normally exempt from income taxes, such as local and state taxes. Almost all municipal debt from any state is exempt from federal income taxes.