Is AFB Federal Tax free fund

[rsingh6675]

Does anyone know if the dividend from AFB (a closed end fund) is tax free? Is there any other good TAX Free municipal bond fund?
Thanks.

 

[LOL!]

Vanguard has good tax-exempt bond funds. Did you not like any of them?

 

[rsingh6675]

AFB

AllianceBernstein National Municipal Income Fund, Inc (AFB) is currently paying 6.9% div. If it is tax free it may be better than Vanguard's tax free funds.

 

[LOL!]

AllianceBernstein National Municipal Income Fund, Inc (AFB) is currently paying 6.9% div. If it is tax free it may be better than Vanguard's tax free funds.

That is likely to be a false statement. If something is paying a higher dividend rate, it is because it is riskier. There is no free lunch. One really needs to examine the total return of bond funds and try to understand the risk:reward circumstances. If something pays 10% tax-free but the price drops by 50%, is that a good investment?

A good way to tell if you are getting your money's worth with a bond fund is to look at the expense ratio. One also has to look at the ratings of the bonds that the fund holds and the duration of the fund.

 

[MichaelB]

AFB is leveraged. Hence the higher yield. Wouldn't want to hold if rates go up. Vanguard muni funds are not leveraged - so comparison is not legit.