A Less Taxing Investment Approach

3) VANGUARD INTERMEDIATE-TERM TAX-EXEMPT FUND INVESTOR SHARES (VWITX) Turner recommends that investors in higher income tax brackets consider this municipal intermediate-term fund as a core holding in the fixed-income portion of their portfolios. It provides federally tax-free and attractive tax equivalent yields for clients who need “greater tax efficiency in their portfolios,” she says. The bond’s yield of 1.91% equals a 2.94% tax equivalent yield at the highest income tax bracket (35% as of May). Top holdings include bonds issued by the California Statewide Communities Development Authority Revenue, New Jersey Economic Development Authority, and the states of Ohio and Massachusetts. This fund has a very low expense relative to its group.
Total fund assets: $34.8 billion
Yield: 1.91%
One-year return: 8.86%
Three-year return: 6.30%
Five-year return: 5.47%
Minimum taxable investment: $3,000
Expense ratio: 0.20%