Municipal investment trust funds offered by fidelity provide a convenient way for investors to access the tax-free benefits of municipal bonds. As a leading provider, fidelity offers a wide range of municipal bond funds that invest in state and local government bonds across the country. With strong research capabilities and experienced portfolio managers, fidelity municipal funds stand out for diversification, consistent performance and low costs. For investors looking for tax-free income, fidelity municipal investment trust funds deserve a close look.
Fidelity’s advantages in municipal investment trust funds
As one of the largest asset managers globally, Fidelity has unique advantages in municipal investment trust funds:
– Massive scale and resources: With over $9 trillion in total client assets, Fidelity has enormous buying power in the municipal bond market and access to deals unavailable to smaller players.
– Seasoned portfolio managers: Fidelity municipal fund managers average 15 years of industry experience and have deep expertise in analyzing municipalities’ credit quality and trends.
– Proprietary credit research: Fidelity has a large team of credit analysts assessing municipal issuers. Their local presence and bottom-up approach lead to informed investing.
– Low costs: Fidelity municipal funds have expense ratios as low as 0.35%, significantly less than competitors. Lower fees boost investor returns over time.
– Diverse lineup: Fidelity offers national, state-specific, high yield, and other municipal bond fund strategies to fit different investor needs.
Key benefits of fidelity municipal investment trust funds
Fidelity municipal investment trust funds provide important benefits for investors seeking tax-free income:
– Tax-exempt income: Municipal fund income is free from federal and often state & local income taxes. This tax advantage makes the income especially appealing to investors in higher brackets.
– Diversification: Municipal funds hold hundreds of bonds across states, sectors and issuers. This diversification reduces risk versus owning individual bonds.
– Professional management: Fidelity’s seasoned portfolio managers actively manage municipal funds, adjusting holdings based on changing market conditions and opportunities.
– Simplicity and liquidity: Buying municipal fund shares is much easier than researching and purchasing individual municipal bonds. Fund shares can also be easily sold on any trading day.
– Stable returns: Municipal bonds offer relatively stable income streams with lower volatility compared to stocks. Fidelity municipal funds deliver consistent tax-free income monthly or quarterly.
Key factors in selecting fidelity municipal investment funds
When choosing among Fidelity’s municipal investment fund offerings, key factors to consider include:
– Income needs: Funds focused on high-yield bonds will offer higher income but more risk. National funds offer moderate yields with greater stability.
– State preference: State-specific municipal funds allow investors to earn tax-free income from their state of residence. National funds provide broader diversification.
– Duration: Longer-duration (maturity) bonds offer higher yields but increase interest rate sensitivity. Shorter durations reduce risk in rising rate environments.
– Costs: Lower expense ratios boost net returns. Fidelity municipal funds offer very competitive fees.
– Credit quality: Funds holding lower-rated municipal bonds offer higher income but require more research into underlying issuer creditworthiness.
– Manager track record: Review long-term returns and risk metrics for municipal fund managers to determine those with skills in the sector.
With advantages like scale, research capabilities, and experienced management, Fidelity offers some of the top municipal investment trust funds for tax-free income. Investors should assess their needs and compare key fund characteristics to identify Fidelity municipal offerings that best fit their portfolio.