[Catalina36]

Originally Posted by retiredguy123

IIM is a closed end bond fund, which means that you cannot buy new shares, so you must buy them on the open market. It has a relative high expense ratio of 1.44 percent. It has provided average returns over the years compared to similar funds, but I wouldn't call it great.

An alternative fund would be the Vanguard Tax-Exempt Bond Index Fund Admiral Shares, which has an expense ratio of only 0.09 percent. Another alternative is the Vanguard Long-Term Tax-Exempt Fund, which has an expense ratio of 0.17 percent. These are not a closed end funds, so you can buy new shares directly from Vanguard, with no commission. To me, the Vanguard funds are a better alternative for a tax exempt investment. Vanguard also has three other tax exempt bond funds.

Comparing the total returns for IIM and the two Vanguard funds, IIM performed slightly better than the Vanguard index fund, but not as well as the Vanguard long term fund.

Thanks for that info. Buying new funds of IIM or buying on the open market brokerage account. Whats the difference if I am getting 5.7% fed tax free and a monthly payout?