Archive for October, 2011

munisMunicipal bond funds are defined as any mutual funds that are invested in municipal bonds, also referred to as “munis” and are debt securities which are issued by counties, municipalities, special purpose districts, and states.  In this manner, capital expenditures can be financed and are federal income tax exempt financial instruments.  Additionally, they may sometimes be state tax exempt as well for the residents of those states which have issued them.

Due to their favorable tax characteristics and the fact that they are a fixed-income type of investment, this is a popular financial instrument to purchase.  They typically provide tax relief for those individuals who fall into higher income brackets.  Like other types of bonds, munis are subject to the credit, duration, quality, and yield considerations of the investor.

A WORD ABOUT OPPENHEIMER ROCHESTER MUNICIPAL BOND FUNDS

According to Lawrence Jones, senior mutual fund analyst of Morningstar Inc., an investment research firm, the Oppenheimer Rochester Municipal Bond funds have always been characterized as high flying and high risk funds.  So if you are a novice investor, you need to be aware of this.  Remember the cardinal rule of investing when you are first starting out.  Never invest more than you can safely afford to lose.

Oppenheimer Rochester Municipal Bonds are available as 8 different state bond funds with 3 variations of each.  There is also a National Muni available in three varieties as well.  The following is a list of these:

  • Arizona Municipal A, B, and C
  • Massachusetts Municipal A, B, and C
  • Maryland Municipal A, B, and C
  • Michigan Municipal A, B, and C
  • Minnesota Municipal A, B, and C
  • North Carolina Municipal A, B, and C
  • Ohio Municipal A, B, and C
  • Virginia Municipal A, B, and C

SIGNIFICANTLY HIGHER DIVIDENDS

The key characteristic of most municipal bond funds, as well as Oppenheimer Rochester Municipal Bond funds, is that the dividends they pay are considerably higher than with other financial instruments such as CD’s and Money Market accounts.  Additionally, there are four major categories of municipal bonds with the Government or US Treasury bonds being the lowest risk investment of the group.

On the other hand, municipal bond funds are issued by local entities and governments are come with considerably higher risk.  The bottom line is that if you are a novice investor, you want to make sure that you plenty of research about the particular funds you are considering investing in.