Happy Thanksgiving 2010

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Top 8 Best Municipal Bond Mutual Funds

The following article will provide top 10 list of municipal bond mutual funds also known as non taxable bond funds. The non taxable bonds consist mainly the municipal bonds either investment grade municipal bond or non investment grade municipal bond. The list include Vanguard Intermediate Term Tax Exempt, Vanguard Limited Term Tax Exempt, American Funds Tax Exempt Bond, and more.

Tax Free Muni Bond Funds

My list mainly consists of 3 or more star of Morningstar rating and big asset underlying the municipal bond mutual funds. Usually, big asset means lot of confident by investor as well constitutional to invest in these funds. With 3 or more star rating, this means the fund has consistently perform under any market condition and should perform better or at least average compare to many of its index benchmark. I also provide list that doesn’t include only 1 state municipal bond funds, this means the list is more diversify and includes multiple states in US.

The following is the Top 8 Best Municipal Bond mutual funds:

1. Vanguard Intermediate Term Tax Exempt Fund - VWITX
2. Vanguard Limited Term Tax Exempt Fund - VMLTX
3. Franklin Federal Tax Free Income - FKTIX
4. American Funds Tax Exempt Bond - AFTEX
5. Franklin High Yield Tax Free Income Fund - FRHIX
6. Vanguard Long Term Tax Exempt Fund - VWLTX
7. Wells Fargo Advantage Ultra Short Term Municipal Income Fund - SMAVX
8. Vanguard High Yield Tax Exempt Fund - VWAHX

Top 5 Vanguard Mutual Funds

The following article will provide top 10 popular Vanguard Mutual Funds list including stock and bond fund. The list is as follows: Vanguard Total Stock Market,Total Bond Market Index, Emerging Markets Stock Index, Vanguard Wellington and more. Top 5 Vanguard Mutual Funds are:

1. Vanguard Total Stock Market - VTSMX
2. Vanguard 500 Index Fund - VFINX
3. Vanguard Total Bond Market Index - VBMFX
4. Vanguard Emerging Markets Stock Index
5. Vanguard Wellington

1. Vanguard Total Stock Market (VTSMX)

This Vanguard Total Stock Market fund has $190 billion total net assets. As part of index fund, this large blend mutual fund has an expense ratio of 0.17%. The annual turnover holding rate is 5%. It is rated with 4 stars rating and gold rating by Morningstar. This fund is passively managed by Gerard C. O'Reilly. This domestic stock fund has returned 19.66% over the past 3 year, 1.27% over the past 5 year, and 4.82% over the past 10 year.

2. Vanguard 500 Index Fund (MUTF: VFINX)

This Vanguard 500 index fund's objective is to track the performance of he Standard & Poor's 500 index. This large blend fund has total net assets of $114 billion. The expense ratio is 0.17% per year. It also has a yield of 1.75%. Michael H. Buek is the fund manager. Investor can start buying this fund with $3,000 minimum initial investment. As of January 2012, the top 5 stocks in its assets are: Exxon Mobil Corporation, Apple Inc, International Business Machines Corp, Chevron Corp, and Microsoft Corp.

3. Vanguard Total Bond Market Index (Ticker: VBMFX)

Rated with gold rating, this Vanguard Total Bond Market Index fund is another popular mutual fund offered by Vanguard. It has an expense ratio of 0.22%. This intermediate term bond fund has a yield of 2.98%. The average effective duration is 5 years and the average effective maturity is 7.2 years. Managed by Kenneth Volpert, this bond mutual fund has returned 7.68% over the past year, 6.89% over the past 3year, and 5.46% over the past decade. As of January 2012, the top 5 sectors are U.S. Treasury (35.65%), Agency MBS Pass-Through (25.60%), Corporate Bond (20.63%), U.S. Agency (4.15%), and Other Government Related (1.95%).

Reasons to buy

If you are interested in Vanguard Brokerage Services account to buy ETF, please check my previous article. There are several reasons why you should consider a Vanguard:

1. Vanguard is owned by its shareholders (i.e. not for profit company)
2. Most of the products whether ETFs or Mutual Funds have the lowest expenses in industry
3. As an investor, you can have many products to choose from whether they are stocks funds or bond funds.
4. Most of the fund follows index and passively managed which can provide a way to follow the market closely. There is less second guessing by its fund manager.

Disclosure: No Position updated on 4/20/2012

Best Taxable Diversified Bond Mutual Funds

The following article will provide top 10 taxable bond mutual funds list. Bond funds are another good way to diversify your investment portfolio since they are also less volatile than stock funds. The list include Pimco Total Return, Vanguard Total Bond Market Index and more.

Intro

Bond also known as fixed income can be classified into two main categories such as taxable bonds and non taxable bonds. Taxable bond can consist of short term bond, intermediate term bond, long term Bond, Investment Grade Corporate Bond, High Yield Corporate bond (Non Investment Grade corporate bond), Treasury Inflation Protected (TIP) Bond. These taxable bonds can be either domestic bonds or global bonds.

The non taxable bond consist mainly the municipal bonds either investment grade municipal bond or non investment grade municipal bond. Non taxable bond mutual funds dividend is usually non taxable. I will provide more details about non taxable bond in my later article. For this article I will focus on taxable bond mutual funds.

The following is the Top 10 list of taxable bond mutual funds:

1. Pimco Total Return
2. Vanguard Total Bond Market Index
3. Templeton Global Bond
4. Vanguard Short-Term Investment-Grade
5. Vanguard GNMA
6. Vanguard Inflation Protected Securities
7. Dodge & Cox Income
8. PIMCO Low Duration A
9. Vanguard Short-Term Bond
10. Loomis Sayles Bond

You can also check my other top bond funds article:

• Best Municipal Bond Mutual Funds September 2011
• Best International Bond Mutual Funds of 2011

Free ETF Trades by Vanguard, Fidelity, Schwab, TD Ameritrade

The exchange traded fund or ETF sector is growing much faster than mutual funds. Recent data has shown that investors have pouring money into this investment fund. More providers and brokerages have provided free ETFs trading option. There are currently 4 brokerages which offer Free ETF trades such as Schwab, Fidelity, TD Ameritrade and Vanguard.

Intro

Most of these ETFs are Passively managed ETFs or index ETFs. This index ETFs track various indexes such as Nasdaq, S&P 500, Russell, and MSCI.

• Fixed income / Bond: short term bond fund, intermediate term bond fund, diversified bond fund, government bond fund, Investment Grade Corporate Bond, High Yield Corporate bond (Non Investment Grade corporate bond), Treasury Inflation Protected (TIP) Bond, emerging markets bond fund, etc.
• Equity / Stock: S&P fund, NASDAQ index fund, large cap fund, Russel 2000 index fund, REIT (Real Estate Investment Trust), Emerging Markets stock fund, International Foreign Large Cap, Foreign Small Cap.
• Commodity: gold, silver, palladium, copper, sugar, cotton more
• Country Specific or Regional countries Specific ETF such as Brazil, China, Malaysia, Singapore

Vanguard

Known for its low cost mutual funds, Vanguard began offering their ETFs for free this May 2010. There are currently 62 free ETFs for trading. Most these ETFs can be traded in Vanguard Brokerage Services (VBS) account which is separate from main Vanguard account.

Fidelity

Fidelity offered 30 commission free iShares ETFs. Fidelity also offers variety of  financial products like mutual funds, cash management, full brokerage service, annuities and many more. The top 6 well known iShares ETFs are: iShares S&P 500 ETF (ticker: IVV), iShares Russell 2000 (IWM), iShares MSCI EAFE (EFA), iShares MSCI Emerging Markets (EEM), iShares Barclays Aggregate bond ETF (AGG), and  iShares Barclays TIPS ETF (TIP).

Charles Schwab

Schwab currently offers 15 commission free Schwab ETFs. These Schwab ETFs include domestic equity ETFs, International Equity ETFs, and Bond ETFs. Schwab also offers $8.95 per trade for trading stock or other ETFs. To open an account, you need $1,000.

TD Ameritrade

TD Ameritrade has offered one of the largest commission free ETFs. It has provide various ETFs from many different providers. There are currently more than 100 ETFs available for investors to choose. These exchange traded funds include 31 Equity ETFs, 3 REIT Sector ETFs, 32 Bond ETFs, 31 International ETFs, and 4 Commodity ETFs.

TD Ameritrade also offers a full brokerage service. It currently offers $9.99 per trade for trading stock or other ETFs.

Note: ETF = Exchange Traded Fund

Bubble burst on Municipal Bond CEF and ETF?

After my initial listing about Top 10 Municipal Bond CEF, the muni bond CEF has been down big time this past week (7-15% drop). Since most of the muni CEF is leveraged, investor should expect a higher volatility than usual non-leveraged fund.

As of Please trade accordingly. I still think it can be a long term investment vehicle. In my opinion, Couple factors can contribute this decline:

1. Treasury has been down after Fed announced QE2. Please check TLT (10 years+ Treasury ETF)
2. Unknown from new tea party congressman/woman. Many new elected congress had campainged about cut spending. This may affected less fed fund for state level etc and state ran big deficit especially California, Illinois, and more.
3. Unknown about tax structure. Extending Bush Tax Cut for all or only for middle class.

Looks at BKN, PMX, PML, PCK (CA Muni CEF), and more

OptionsHouse Online Discount Brokerage Review

OptionsHouse is an online brokerage services that offers low cost options and stocks trades to its large client base of investors or traders. As one of the known discount broker, they also provide low cost stock trades and other financial services (checking & Debit card) for their customers.

To trade stock, it only cost $3.95 per trade. It also doesn't have any minimum account balance. Only need $1,000 to open cash account and $2,000 for margin.

The following is the standard pricing or commission fee of Optionshouse brokerage account:

• Products: Stocks, Options, mutual funds, treasury & corporate bonds
• Market Orders: 3.95 per trade
• Limit Orders: 3.95 per trade
• Broker-Assisted Orders: $3.95 per trade
• Mutual Funds: $9.95 per trade for no load fund; additional fees for load funds
• Options: $8.50 + $0.15/contract or $1.00 per contract
• Minimum to Open: $1,000 (Cash) & $2,000 (Margin)
• Account Maintenance Fee: $0.00
• Account inactivity fee: $0.00
• IRA Closing Fee: $15.00
• Some Other Fees: Wire Fees: $15.00 per transfer.
• Outgoing ACAT: $50.00.
• Maximum Margin Rate: Based on proprietary base rate
• Extras: Check writing available. Debit cards are available at a fee for certain accounts.

Advantages using OptionsHouse:

• The commission is one of the lowest with $2.95/trade flat fee for stocks trading or ETF trading
• Also offers two structure of flexible commission plans for options trading
• There is variety of useful tools for options traders.

OptionsHouse used to have $2.95 per trade for trading stocks or ETFs.

More details on My Review of OptionsHouse Online Discount Brokerage Account