Legg Mason Western Assets Managed Municipals SHMMX Fund

One of top muni bond mutual funds is Legg Mason Western Assets Managed Municipals fund. This fixed income fund is classified as muni national long bond fund. It also has a tax free yield of 4.28%.

Legg Mason Western Assets Managed Municipals A (SHMMX)

The investment objective of Legg Mason Western Assets Managed Municipals fund is to maximize current interest income that is exempted from gross income for regular federal income tax purposes with consistent prudent investment management and to achieve capital preservation. This bond mutual fund invests >80% of assets in intermediate-term and long-term municipal securities with maturities from 1 to >30 years at the time of purchase.

Fund Details

SHMMX fund

• Fund Inception Date: March 4, 1981
• Ticker Symbol: SHMMX
• CUSIP: 52469J202
• Beta (3yr): 1.28
• Rank in category (YTD): 21%
• Category: Muni National Long
• Distribution Rate: 4.28%
• Capital Gains: 0%
• Expense Ratio: 0.64%
• Net Assets: $ 5.28 billion
• Number of Years Up: 27 years
• Number of Years Down: 3 years
• Annual Turnover Rate: 43.00%

Stephen A. Walsh has been managing this muni bond fund since February 2007. It was first introduced to public on March 4, 1981. It is classified under the Muni National Long category. As of April 23, 2012, it also has 0.64% expense ratio and 43.00% holdings turnover. The fund category itself has average annual expense ratio of 0.94% and average annual holdings turnover of 23.75%. There is a management fee of 0.25% and a maximum sales charge of 4.25%. The total net assets are $5.28 billion. This fund also distributes its dividend on monthly basis. It currently uses Barclays Municipal Bond Index as its benchmark.

Morningstar analysts rated this municipal bond fund with Bronze rating. It also has 4-stars rating. Overall, this bond mutual fund has performed very well with 27 years of positive return and 3 years of negative return. The 1-year best return was achieved in 2009 with 23.43%. The following is fund performance for the past 5 year:

• 1-year: 12.60%
• 3-year: 8.99%
• 5-year: 5.27%
• 10-year: 5.16%

Investors can buy this Legg Mason fund with the minimum initial investment of $1,000 for regular brokerage account. The minimum subsequent investment is $50. If you are interested on investing, you can purchase it through one of these 75 brokerages. Some of the brokerages are Edward Jones, Raymond James, Ameriprise Brokerage, LPL SAM Eligible, Common Wealth Core, ETrade No Load Fee, etc. The other classes are Class B (SMMBX), Class C (SMMCX) and Institutional Class (SMMYX).

Top 12 Municipal Bond Mutual Funds 2012

As of March 2012, the top sector allocations of this fund are Transportation (20.1%), Health Care (18.2%), Industrial Revenue (11.9%), Education (8.8%), Special Tax Obligation (8.6%) and Power (8.2%). The fund has total holdings of 564. The effective duration is 9.0 years.

Per fund’s prospectus, the investments risks are: Market and interest rate risk, Credit risk, Derivatives risk, Liquidity risk, prepayment risk, etc.

Best High Yield Municipal Bond Mutual Funds

Pros:

• Low expense ratio fee
• Rated among the best muni bond mutual fund
• Good long term track record

Cons:

• Has a sales load
• Slightly higher portfolio turnover rate

Disclosure: No Position