California Muni Bonds for Long-Term Investors

California municipal bonds, also known as muni bonds, offer a unique investment opportunity for long-term investors. They are issued by local governments and other public entities to finance infrastructure projects, such as roads, bridges, and public transportation.

These bonds are generally considered to be a low-risk investment, with a strong track record of stability and reliability. In fact, California muni bonds have a default rate of less than 1%, making them an attractive option for those looking to diversify their portfolios.

One of the key benefits of investing in California muni bonds is the tax-free income they provide. This can be a significant advantage for investors in higher tax brackets, as it can help reduce their overall tax liability.

California muni bonds have been a staple in many investors' portfolios for years, and for good reason. They offer a unique combination of tax-free income and relatively low risk.

The average annual total returns for California muni bonds have been impressive, with some classes of shares outperforming others. For example, Class A shares have no sales charge and are available to all investors.

However, it's essential to understand the nuances of each share class. Class C shares, for instance, have a 1% CDSC (contingent deferred sales charge) for redemptions within less than one year, which can eat into your returns.

On the other hand, Class I shares have no sales charge and are available to specified classes of investors. This can be a significant advantage for those who qualify.

Here are the average annual total returns for different periods:

It's worth noting that Class C shares automatically convert to Class A shares 8 years after purchase, which can impact their returns for periods longer than 8 years.

Overall, understanding the average annual total returns and the characteristics of each share class is crucial when investing in California muni bonds. By doing your research and choosing the right class for your needs, you can maximize your returns and achieve your financial goals.

Morningstar ratings for California muni bonds may vary among share classes and are based on historical risk-adjusted total returns, which are not indicative of future results.

Lipper rankings are based on total return and related to each share class, with a Percentile rank being a percentage value between one and 100 percent assigned to each fund in its respective category.

Performance comparisons for California muni bonds may be less meaningful due to the fund's high yield strategies, including significant investment in below investment grade bonds and opportunistic use of portfolio leverage.

A negative SEC 30-Day Yield results when accrued expenses of the past 30 days exceed the income generated during the past 30 days, indicating a fund's expenses are outpacing its income.

Credit ratings for California muni bonds are subject to change and are based on the lowest rating given by one of the national rating agencies: S&P, Moody's, or Fitch.

Municipal bonds are issued by government agencies to finance community projects, such as roads and schools, and are often tax-exempt.

Most municipal bonds are tax-exempt, which means interest on these bonds is excluded from federal tax purposes.

Lipper rankings are based on total return and relate to each share class, assuming reinvestment of dividends and excluding any applicable sales charge. Without expense limitation, total return would be less.

Past performance is no guarantee of future results, but Lipper rankings can give you an idea of how a fund has performed historically. A Percentile rank is a percentage value between one and 100 percent assigned to each fund in its respective category.

The top percentile (1) is considered better performing, while the bottom percentile (100) is the worst performing. Absolute rank is the numerical ranking of the fund relative to the total number of funds in the category.

Keep in mind that the fund's performance may be less meaningful compared to others in its category due to its unique investment strategies, such as significant investment in below investment grade bonds and opportunistic use of portfolio leverage.

A negative SEC 30-Day Yield results when accrued expenses of the past 30 days exceed the income generated during the past 30 days.

Credit quality is a crucial aspect to consider when investing in a fund. Ratings shown are the lowest rating given by one of the following national rating agencies: S&P, Moody's or Fitch.

AAA, AA, A, and BBB are investment grade ratings. Credit ratings are subject to change without notice.

A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations.

Holdings designated Not Rated are not rated by these national rating agencies. This doesn't necessarily mean the issuer is of low quality, but rather that the rating agency hasn't assigned a rating.

Ratings are based on a scale that generally ranges from AAA (highest) to D (lowest).

California muni bonds are issued by local governments and other public entities to finance various projects and activities. These bonds are typically used to fund infrastructure projects, such as roads, bridges, and public buildings.

The interest on California muni bonds is exempt from federal income tax, which can make them an attractive investment option for some investors. This is because the interest is considered tax-exempt.

Investors can purchase California muni bonds directly from the issuer or through a broker. This can provide a relatively stable source of income, with regular interest payments.

The holdings of a bond portfolio can give you a glimpse into the types of investments it contains. The California State Public Works Board holds 3.72% of the total weight.

Here are some of the top issuers in the portfolio, based on the weight percentage:

The portfolio also includes bonds from various sectors and asset classes, with a mix of short-term and long-term investments. Some of the bonds have a coupon rate of 5% or higher, such as the San Francisco City & County Airport Comm-San Francisco Inter bond. May not equal 100% due to rounding.

The pricing of a bond fund can be a bit tricky to understand, but don't worry, I've got you covered.

The SEC 30-Day Yield is a standardized formula that's used to calculate the yield of a fund, and it's based on the maximum offer price per share.

This yield doesn't take into account the tax implications of investing in a bond fund, which is important to consider when making investment decisions.

The Taxable-Equivalent Yield (TEY) represents the yield that must be earned on a fully taxable investment in order to equal the yield of the fund on an after-tax basis at a specified tax rate.

A lower TEY would be the case for investments that generate qualified dividend income, which is taxed at a rate lower than an individual's ordinary graduated tax rate.

The TEY is based on the fund's Distribution Rate or SEC 30-Day Yield on a specific date and the combined federal and state income tax rate shown.

Each state receives a certain amount of the volume cap allocation from the federal government that limits the maximum amount of tax-exempt bonds that can be issued to finance certain types of qualified projects during a calendar year.

Exempt facility bonds are not subject to volume cap, but only if they meet specific qualifications.

Airports, docks and wharves, environmental enhancements of hydro-electric generating facilities, qualified public educational facilities, governmentally owned solid waste disposal facilities, and governmentally owned high-speed intercity rail facilities are exempt from volume cap.

Privately owned high-speed intercity rail facilities are also exempt, but only 75% of the bond proceeds can be used for these projects.

The investment strategy for California muni bonds is straightforward. The Fund seeks to invest in investment-grade bonds whose income is exempt from federal and California personal income taxes.

This means that investors can enjoy tax-free income from their investments. The income from these bonds is indeed exempt from federal and California personal income taxes, making them an attractive option for those looking to minimize their tax liability.

When it comes to investing, it's essential to have a clear objective in mind. The Fund seeks tax-free income.

Investing in tax-free income can be a smart move, especially for those living in high-tax states like California. The strategy typically seeks investment-grade bonds the income of which is exempt from federal and California personal income taxes.

If you're seeking California Municipal Bonds, we can help you navigate the market and find the right products for your needs.

We tailor our communication based on what YOU are seeking, and if your objectives are realistic, we will find it. Our team has decades of experience in the CA MUNI market, and we monitor the markets to make recommendations based on various attribute changes in material events.

Our one-time fee on the buy/sell should be far cheaper than any fee you are paying now, and our electronic execution platforms are faster, more efficient, and cheaper for the client - resulting, in most cases, in a higher yield-to-worst.

We can help you understand credits, how they work, how they are paid, and most importantly, what to avoid. We answer the complicated questions pertaining to AMT, Green bonds, OZs, fiscal budget shortfalls and overages, TTEE issues, and market conditions.

Here are some benefits of working with us:

Investing in California muni bonds comes with some risks and considerations.

Interest rate risk is a significant concern, as changes in market interest rates can affect the value of your bond.

California muni bonds are generally considered to be low-risk investments, but even low-risk investments can have some level of risk.

The credit risk of a bond is the risk that the issuer will default on payments. In California, the state and local governments have a strong credit rating, which reduces this risk.

Tax-exempt status can be a major advantage for muni bonds, but it's essential to understand the tax implications of investing in these bonds.

Maturity dates vary for California muni bonds, ranging from a few years to over 30 years. This can affect the return on investment and the overall strategy for investing in these bonds.