Colonial Mutual Funds has introduced a long-term, North Carolina municipal bond fund.
The fund, which was launched Sept. 1, has an average maturity of 20 years, said Jeffrey B. Augustine, vice president and portfolio manager.
Higher federal taxes coupled with North Carolina's 7 3/4% state income tax rate were considered in the firm's decision to start a fund there, Augustine said. Colonial also took into account North Carolina's conservative fiscal management, which has helped the state maintain a triple-A general obligation bond rating for more than 30 years, as well as its large population, low unemployment, and regional economic hubs centered around Charlotte, Greensboro, and Raleigh, Augustine said.
In addition, a growing number of retirees are relocating to North Carolina and are considered likely candidates for the conservative tax-exempt investments that Colonial touts, Augustine said.
The fund's portfolio is expected to contain an array of general obligation and utility bonds. Colonial also likes essential service revenue bonds and the state's strong hospital credits.
The North Carolina bond fund is a load fund available through banks, broker-dealers, and financial planners. Colonial has $6 billion in tax-exempt assets under management.