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Teafx | Tax-Exempt Bond Fund Of American Funds

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Teafx

Teafx | Tax-Exempt Bond Fund Of American Funds: this article gives you information about the Teafx. It gives breif information about it’s rankings, risk, investment strategy and many more. May this information helps you and blown-up your mind.

Teafx | Tax-Exempt Bond Fund Of American Funds

American Funds

TEAFX – A Brief Introduction

Municipal bonds are sometimes used as a source of income by investors in high tax brackets.

The American Funds Tax-Exempt Bond Fund invests in muni bonds issued by cities, states, counties, and other municipalities across the United States.

These bonds are free from federal, state, local taxes and taxes for residents of the state where the bond was issued.

As of July 21, 2021, the fund’s assets totaled nearly $27.21 billion, invested in 5,019 different holdings.

Its portfolio is primarily made up of investment-grade bonds issued by municipalities in the United States.

California, Texas, Illinois, Florida, New York, and Ohio are among the top states represented in the fund, as are those with large populations.

Revenue Bonds

The fund favors revenue bonds over general obligation bonds. Revenue bonds are issued to fund the construction or renovation of income-generating facilities such as toll roads, hospitals, or airports.

The emphasis on revenue-generating bonds leads to “heavier weightings in sectors such as health care and transportation.”

Investors should not expect muni bonds to provide high returns; this is the cost of tax advantages.

This fund’s managers take more interest rate and credit risk than peers in the Morningstar “Muni National Intermediate” category.

In recent years, the increased risk has contributed to a higher return than the category average.

Over the last year, the fund has returned 5.29 percent, and over the previous three years, it has returned 5.04 percent.

North Texas Tollway Authority bonds, Metropolitan Transportation Authority of New York Transport Revenue bonds, Illinois State Toll Highway Authority bonds, State of California General Obligation bonds, and Buckeye Ohio Tobacco bonds are among the top holdings.

Capital Group, American Funds’ parent company, benchmarks the fund against the Barclays Municipal Bond Index. Therefore the fund’s performance, net of maximum sales charges, underperformed this benchmark.

Because managers have increased the fund’s interest rate and credit quality risk, either a rising-rate environment or a recession could reduce returns.

In the last 5 years, the fund return 3.31 percent, and over the last decade, it has returned 4.60 percent.

Rankings

U.S. News evaluate 298 Muni National Interm Funds. Hence base on the ratings of leading fund industry researchers, our list highlights the top-rate funds for long-term investors.

Strategy For Investment

The fund’s aim for providing a high level of current tax-free income while also preserving capital. Hence managers have freedom for investing anywhere in the United States.

Portfolio Role

Morningstar considers the fund to be a “core” holding.

Management

This fund’s management tenure is a distinguishing feature. Brenda Ellerin joined the fund in 1998, followed by Karl Zeile in 2003. Therefore other muni bond strategies for American Funds are manage by all three.

This portfolio divides into sleeves, with Langberg, Ellerin, and Zeile managing a quarter of the fund. Hence a team of analysts manages the remaining 25%.

Performance

Moreover, 5.29 percent in past year, 5.04 percent in past three years, 3.31 percent in the past five years, and 4.60 percent in the past decade.

Fees

This fund charges an expense ratio of 0.34 percent.
Risk

Investing in bonds is risky in every way. Hence investing in investment-grade municipal bonds issued by solvent municipalities reduces the risk of default.

This fund assumes a higher interest rate and credit quality risk than some of its peers. Therefore it could lead to price declines during rising interest rates or economic recessions.

Measurements Of Volatility

Indicators of volatility reflect the degree of uncertainty or risk of change in the value of a security.

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