Intermediate Municipal Fund
  • An intermediate municipal debt fund investment can offer tax exempt interest income on two and possibly three different levels
  • The best no load funds can be found without paying for investment advice
  • Intermediate municipal debt benefits both the issuing municipality and the investor

Why are no load short intermediate municipal fund investments so popular, regardless of the state the municipal debt is issued in? Part of the reason for this is the fact that investing in municipal debt can offer tax exemptions for investors who live in the issuing municipality. Federal, state, and even local tax exemptions are possible for returns on municipal debt investments. Another reason that these are considered some of the best no load funds is because of their maturity length. Intermediate municipal debt funds hold municipal bonds and other debt securities that have a maturity date which ranges from five to ten years. According to some experts, choosing intermediate municipal debt instead of long municipal debt will help lower the risks involved, and protect you against defaults. One group that these investments are extremely popular with are investors who are in the twenty eight percent and above tax brackets, because of the tax exemptions that the interest income receives. Municipal debt is issued to raise funds which are needed for building and improvement projects, and these investments are considered reasonably safe, because most municipal entities will not default. There is still the risk of this happening though, and even municipal debt funds should not be considered risk free or guaranteed safe from losses.

Investing in a municipal debt fund can be done on both an individual and an institutional basis, but there are some differences. With institutional municipal debt funds, there are very high initial investment requirements, but the advantage is that the operating expenses charged are much lower. Institutional intermediate municipal funds may have initial requirements of one million dollars or more, which is usually too steep for individual investors. The best no load funds for you are the ones which are offered by the municipal entities where you live, including both state and city. There are many municipal debt funds that only invest in the municipal debt of one single state, while there are other funds that may invest in a wide variety of municipal debt from a number of different states. To get the best tax exemption benefits possible, invest in municipal debt funds which only have holdings in the state or city that you live in. This will maximize the amount of interest earned which is tax exempt, and this is money that can be reinvested into the fund to increase the balance of your investment.

The best no load funds are not usually difficult to find. Look for municipal debt funds that invest in high quality municipal debt with intermediate maturity times. This debt can be low risk or high risk, depending on the specific debt and municipality, and there are companies which rate this intermediate debt according to the risk to investors. Morningstar is one of these, and their quality ratings range from one to five stars, with five being the highest possible rating. Municipal bonds are normally also rated, and anything this is rated BBB or above is considered high quality investment grade municipal debt. Look for funds that have high ratings and that invest only in investment grade intermediate municipal debt, because these funds have the lowest risks. The downside to minimizing risks is that the risk taken is related to the returns, so less risk means a lower return. Choosing from the best no load funds when you invest in intermediate municipal debt means cutting unnecessary fees. Load fees are like sales commissions, meant to compensate the broker for professional advice. Most investors are capable of doing the research and making the investment decisions which are best for their circumstances, so it is not normally necessary to use load funds at all.