If you still have a large cash position, it is likely for a reason. Whatever that reason is, if you have been thinking about diversifying that cash position, it might be a good time to put that plan in motion. The question is: Can you increase your total return potential without completely letting go of the safety net of cash? Well, with the income generated from allocating a portion of your cash into short-term and limited-term municipal bonds, you can.
Short-term and limited-term municipal bonds do not necessarily demonstrate the characteristics, including risk profiles, of cash and cash alternatives. However neither short- and limited-term municipal bonds nor cash and cash alternatives typically exhibit the price volatility and duration risk of longer-term bonds. The benefits of using one of the following strategies are diversification of your cash position, and the potential for greater returns (net of taxes) – without having to invest all of your cash.
- A compelling tax-free income stream
- Diversification benefits
- Historically higher yield than individual municipal bonds
- In some cases, historically comparable yields with longer maturity portfolios
- Experienced, professional managers performing active risk management
- A range of shorter maturity, higher grade options along the municipal bond curve
Talk to your financial advisor today or call 1.800.CALL.OPP (225.5677) to learn more about the Oppenheimer Rochester suite of Maturity Managed Funds.
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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. Further, a portion of some funds’ distributions may be taxable and may increase alternative minimum tax (AMT) for investors subject to that tax; distributions from net realized capital gains are taxable as capital gains.
The funds invest in below-investment-grade debt securities, which may entail greater credit risks, as described in each fund’s prospectus. These securities (sometimes called “junk bonds”) may be subject to greater price fluctuations and risks of loss of income and principal than investment-grade municipal securities. The funds may invest in municipal securities within a single state or related to similar type projects, which can increase volatility and exposure to regional issues. The 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.
These views represent the opinions of OppenheimerFunds and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the publication date, and are subject to change based on subsequent developments.
Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested.
Before investing in any of the Oppenheimer funds, investors should carefully consider a fund’s investment objectives, risks, charges and expenses. Fund prospectuses and summary prospectuses contain this and other information about the funds, and may be obtained by asking your financial advisor, visiting oppenheimerfunds.com or calling 1.800.CALL OPP (225.5677). Read prospectuses and summary prospectuses carefully before investing.