Market knowledge in managed municipal bond portfolios |
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| Institution: | 1. York University - Schulich School of Business, 4700 Keele Street, Toronto, Ontario M3J 1P3, Canada;2. School of Business, SUNY at Albany, 1400 Washington Ave, Albany, NY 12222, USA;3. York University - Schulich School of Business, 4700 Keele Street, Toronto 4700, Ontario M3J 1P3, Canada;1. University of Richmond;2. Binghamton University, State University of New York, United States |
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| Abstract: | In this paper, we analyze the investment performance of two types of open-end municipal bond mutual funds: first, mutual funds that have the objective of generating income free from federal income taxes; second, funds that have the objective of generating income free from not only federal but also a particular state 's income taxes. Our results suggest the following: first, municipal bond fund monthly returns either mirror or lag the Lehman Brothers Municipal Bond Index returns on a risk-adjusted basis; second, when state taxes are significant, such as in California and New York, the investor benefits from investing in state-specific municipal bond funds. |
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