In today’s low interest rate environment, many investors find it hard to get excited about the yields being generated by savings accounts or bank-issued certificates of deposit. While some investors appreciate the security that comes with FDIC protection, many others take a dim view of these investments’ current inability to drive asset growth.
Oppenheimer Rochester Short Term Municipal Fund is designed to provide competitive levels of yield for investors and to do so with less net asset value (NAV) volatility than longer-term muni bond investments. Additionally, because it primarily holds bonds at the shorter end of the yield curve, the Fund will be less sensitive to interest rate changes than a fund with a preponderance of longer-maturity holdings.
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* Average Effective Maturity does not account for interest earned.
Fixed income investing entails credit and interest rate risks. Interest rate risk is the risk that rising interest rates, or an expectation of rising interest rates in the near future, will cause the values of a fund’s investments to decline. Risks associated with rising interest rates are heightened given that rates in the U.S. are at, or near, historic lows. When interest rates rise, bond prices fall and a fund’s share price can fall. Municipal bonds are subject to default on income and principal payments.
Below-investment grade (“high yield” or “junk”) bonds are more at risk of default and are subject to liquidity risk. Under certain market conditions, some unrated securities may trade less actively than rated securities. Our funds can have a relatively high portion of their portfolio holdings in particular segments of the municipal securities market, such as tobacco bonds or real-estate-related securities. They may also invest substantially in municipal securities within a single state or related to similar type projects, which can increase volatility and exposure to regional issues. Funds may also invest substantially in Puerto Rico and other U.S. territories, commonwealths and possessions, and could be exposed to their local political and economic conditions. Deterioration of the Puerto Rican economy could have an adverse impact on Puerto Rican bonds and the performance of the Rochester municipal funds that hold them.