Municipal Debt
  • Short term municipal debt no load funds invest in municipal debt that is short term in nature
  • The best no load funds do not charge any load or marketing fee
  • Municipal debt funds are an easy way to invest in a wide variety of tax exempt municipal bonds

Short term municipal debt no load funds offer a number of advantages to investors, but that does not mean that these funds are perfect for every investor. Municipal bond debt is debt that is issued by municipalities. This includes states, counties, cities, and other governing entities, and the money raised by issuing these debt securities is used for a specific public project or other purpose to benefit the local population. This can include schools, roads, hospitals, airports, and numerous other projects. Municipal debt funds and no load bond funds that invest in municipal debt securities are normally tax exempt from federal and usually state taxes as well. As long as you are a resident of the state that the municipal debt is issued from there are no state taxes, but if you invest in this debt from other states you may pay state taxes in your home state for any profits. Short no load bond funds invest in short term debt securities, which are usually between six months and three and a half years, and are a little longer than ultrashort bonds. The best no load funds in municipal debt will be high quality, and just like other debt securities municipal debt can be rated from junk to high quality. Those with lower ratings will provide higher yields but also carry higher risks of defaults as well.

Even high yield short municipal bond debt is considered safer than many other investment options, like the stock market which can have high levels of risk and volatility. Municipal debt is backed by the municipality that issues it, and most municipalities do not default. Municipal debt funds invest in a variety of municipal debt securities, and a diverse portfolio of investments is important. The best no load funds that involve municipal securities based on debt are ones that have an investment portfolio that is very diverse and widely spread. This will help to hedge against any large and devastating losses. With a diverse investment portfolio no load bond funds may have losses in one area which are evened out by gains in another area. Choosing no load municipal debt funds will result in significant savings if you are willing to do the research and make your own investment decisions. Load fees are like commissions paid to the broker who directs you to the funds chosen. If you are comfortable comparing funds and making investment decisions you can actually save up to eight percent, sometimes even more. This fee may be taken in front, called a front load fee, and this fee is deducted before your capital is invested. A load fee can also be applied when you sell, called a back end load fee, and this can still cost a substantial amount.

One of the best no load funds when it comes to municipal debt is the Wells Fargo Advantage Short Term Municipal Bond Investment Fund, trading under the symbol STSMX. With the value of net assets of over eight hundred and twenty seven million dollars, this funds is a major player in the municipal bond debt market. There are no load fees charged, and the fund’s operating expenses are point six six of one percent. This fund also does not charge any 12b-1 marketing fees, and is offered by the Wells Fargo family of funds. The fund has holdings of at least eighty percent which are invested in municipal bond debt that is short term, and is one of the best municipal debt funds available. Municipal debt offers unique tax advantages as well as relative safety and volatility, and municipal debt funds allow you to invest in a wide variety of municipal debt easily and conveniently.