Oppenheimer Rochester Intermediate Term Municipal Fund one of our three national muni funds, has been designed for risk-averse investors who nonetheless seek higher yields than are currently available from FDIC-insured investment products like savings accounts or certificates of deposit (CDs).

Muni bond funds have different risk characteristics than FDIC-insured products but often appeal to investors whose objectives include relatively low levels of share-price volatility and competitive levels of tax-free income.

This fund holds more than 250 individual securities and seeks to deliver competitive levels of tax-free income. The net investment income generated by the fund’s holdings is exempt from federal income taxes and from the 3.8% tax on unearned income that some investors pay under the Patient Protection and Affordable Care Act (Obamacare).

Like Oppenheimer Rochester Short Term Municipal Fund, this fund maintains an average effective maturity (AEM) closer to the short end of the yield curve. The AEM target for this fund is 3 to 7 years.

The investment team also uses other risk management techniques that we believe help make this fund attractive to many fixed income investors. For example, the fund’s holdings are primarily investment grade, and the purchase of below-investment-grade issues (those rated BB or lower) is restricted at the time of purchase to 10% of fund assets.1

Many investors seem to appreciate that funds with a preponderance of short-term investment-grade bonds tend to be less volatile than funds holding mostly longer-term and/or below-investment-grade bonds.2 Additionally, this fund has never included inverse floating-rate securities (aka “inverse floaters”), as they can exhibit higher levels of price volatility than other bond structures. Our intent is to maintain this practice.

All 13 of the Oppenheimer Rochester funds are managed based on an investment approach we call the Rochester Way.

Follow @RochesterFunds for more news and commentary.

1OppenheimerFunds, Inc. determines the credit allocation of its funds’ assets using ratings by nationally recognized statistical rating organizations (NRSROs), such as S&P Global Ratings (S&P). For any security rated by an NRSRO other than S&P, OppenheimerFunds, Inc. converts that security’s rating to the equivalent S&P rating. If two or more NRSROs have assigned a rating to a security, the highest rating is used.

2Longer-term and below-investment-grade bonds generally offer more favorable coupons, and funds that primarily invest in these types of securities generally produce higher levels of tax-free income.