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Municipal Bonds


The portfolio managers invest in municipal bonds that generate attractive levels of tax-free income. Their investment process employs a bottom-up, research-oriented approach designed to generate long-term, income-driven total return.

Investment Approach

Our investment approach – The Rochester Way – involves scouring the market for municipal securities that meet our stringent credit criteria and buying bonds that we believe will deliver above-average yields relative to peer funds. Income has historically contributed the lion’s share of the long-term total returns generated by bonds.

The Rochester team focuses on identifying inefficiencies in market pricing and seeks to maintain a thoughtful mix of industry sectors, maturities, coupons and credit ratings in each fund. We also prospect for yield-enhancing opportunities in the secondary market, often picking up odd lots that we believe can add significant incremental yield. We look for non-rated issues with solid credit qualities, which we believe can often help enhance a fund’s tax-free yield. The funds are managed to deliver a monthly distribution of net investment income to its shareholders, and every fund has consistently delivered tax-free income to shareholders.

Municipal bonds infographic 1

Risk Management

The Rochester team focuses on credit risk, in balance with a security’s financial rewards, when considering each fund’s investments. Portfolios invest in a broad range of bonds, choosing securities with a variety of structures and from a mix of sectors to mitigate the potential impact of individual credit risk. The team offers a product line characterized by varied degrees of interest rate sensitivity for the investors’ discretion.

The team also invests in a diversity of maturities and call dates to reduce reinvestment risk, which occurs when current yields are less favorable than those of the maturing bonds, and call risk, which occurs when an issuer buys back bonds ahead of maturity.

Investors may wish to consider the potential effects of idiosyncratic risk, which is the inherent risk of investing in individual bonds; interest rate risk, which is the risk that the value of the bonds may change as rates fluctuate; and geographic risk, which is the risk related to economic, regulatory or political developments in a given region.

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