- Short intermediate municipal no load funds are normally exempt from federal taxes, and may be exempt from state taxes as well
- No load municipal bond funds do not charge load fees, which can save you up to eight percent or more in these fees
- Municipal bond debt and municipal debt funds can be a great investment, especially for investors who are in higher tax brackets
Short intermediate municipal no load funds are funds which hold investments in municipal debt securities for a time period that is between one year and five years. These funds may also be called municipal debt funds, municipal bond debt mutual funds, or simply no load municipal bond funds. These funds use their investment pool to invest in municipal debt, which are bonds and other debt securities issued by municipalities, which can include local governments like cities, counties, and states, and other public entities. Municipal debt securities are issued to raise money needed by the municipality for projects that benefit the public. These can include airports, schools, colleges, roads, and other improvements. Municipal bonds and debt are used to better the communities of the local population, whether it is a town, state, or other municipality. Municipal debt funds allow you to invest in many types of municipal debt by making one investment, because these funds usually have diversified portfolios and are professionally managed.
Short intermediate no load municipal bond funds my work well for a wide variety of investors, but these funds are not for everyone. All investments carry some risks, whether these risks are large or small, and you should never invest money that you can not afford to lose. Having said that, municipal debt mutual funds are considered one of the safer investment methods. Because this debt is backed by the municipality, it is less likely that there will be a default or missed payments. These bonds can also be found insured, which means for a higher amount if a default does occur a third party will insure the payment. Municipal bonds are like all other types of bonds, they are rated according to their creditworthiness and risks involved. These bonds can be rated from the highest quality all the way down to junk bonds. This rating can help you determine how much risk a bond actually carries. No load municipal bond funds usually involve a number of municipal bonds that may have different ratings, making for a very diverse investment. Using no load funds also helps improve the quality and value of your investment, because these funds do not charge high load fees. These fees deduct from the value and performance of your investment, making it worth less and positioned behind the no load funds at the very start of the investment. This is especially true of front end load charges.
Short intermediate municipal funds that do not carry a load charge are usually the best investment choices, as long as you are comfortable making your own investment decisions or are willing to learn what you do not know or understand. These funds offer tax exempt status, which means federal and possibly state taxes are waived on any income resulting from the investment. The tax exempt status makes no load municipal bond funds extremely attractive to many investors in higher tax brackets. One of the short intermediate municipal funds available is the Short Intermediate Muni Income Fund, which trades under the symbol FSTFX. This is one of the no load municipal bond funds which offers federal tax exemption, and the fund holds around one hundred investments into many types and categories of municipal bonds. This fund does have a redemption fee if the shares are not held for a specific time period though, and this fee equals one half of one percent of the shares redeemed, but only if the shares are held less than thirty days. This redemption fee is not a load fee, but rather covers the costs of frequent transactions so that all fund members do not have to cover the costs for investors who frequently buy and sell shares. This is more of a management or administrative cost, and does not apply if you hold shares in this short intermediate municipal bond fund.
