Kansas Tax-Free Intermediate Bond Fund

Overview

Objective Seeks current income exempt from federal and, to the extent possible, from Kansas income taxes, as is consistent with the preservation of capital.
Strategy Focuses primarily on investing in municipal obligations issued by the State of Kansas and its political subdivisions.
Fund Manager The Fund is managed by the Fixed Income Team, a group of senior-level investment professionals who average 27 years of experience.
Risk/Return On a low to high scale of 1–7, the risk level is 2
In general, greater returns are associated with greater risks.
 
 

Fund Statistics

Inception Date 12/26/00
Ticker Symbol KTXIX
Cusip 200626786
Minimum Initial Investment $1,000
 

Commentary

Geopolitical tensions involving Iran and the Strait of Hormuz drove significant volatility in global energy markets during the quarter, with Brent crude briefly exceeding $100 per barrel before retreating as supply disruptions eased and shipping activity partially resumed. Elevated energy prices renewed inflation concerns and prompted markets to scale back expectations for Federal Reserve (the Fed) rate cuts. The Fed held their target rate steady at 3.50–3.75% at its June meeting, citing persistent inflation alongside a resilient, but gradually moderating, labor market. While economic activity remained stable and inflation continued to show uneven progress, the Fed adopted a cautious, data-dependent approach and revised its inflation outlook higher while modestly lowering its Gross Domestic Product (GDP) growth forecast for 2026.  The Treasury curve flattened 23 basis points (bps) and the municipal curve also flattened by 20 bps during the quarter.  The 10-year Treasury yield increased by 15 bps from 4.32% to 4.47% and the 10-year muni yield decreased by 17 bps from 3.12% to 2.95%.  The 10-year muni/treasury ratio decreased to 66%.  Demand for municipal bonds continued at a strong pace, supported by $53 billion in net fund inflows year-to-date, according to JP Morgan.  A healthy supply of tax-exempt debt persisted with roughly $167 billion issued in Q2.  New issuance is up over 5% year-over-year.  Refunding deals made up over 31% of new supply and taxable supply comprised over 6%.  In Q2, long-term maturities outperformed shorter maturities, and lower-quality bonds outpaced higher-quality counterparts.  Credit spreads finished tighter for the quarter.  Bloomberg's high yield muni index outperformed their investment grade index by 85 bps.

For the second quarter, The Commerce Kansas Tax-Free Fund’s return of +1.72% underperformed the Bloomberg 3-15 Year Blend benchmark of +1.74%.  Longer durations were the most additive.  The Fund’s exposures to the General Obligation (GO), water/sewer, and lease sectors performed the best.  Transportation, housing, and higher education sectors lagged. 

 
 
Total Fund Assets as of 6/30/2026 $91,632,014
Net Asset Value1 $18.51
Effective Duration2 5.87 Yrs
Investments in fixed income securities are subject to the risks associated with debt securities including credit and interest rate risk. When interest rates rise, the prices of bonds and therefore the value of fixed income mutual fund shares can decrease and an investor can lose principal value. The Fund is non-diversified. Due to the smaller number of bonds generally held in the portfolio, the Fund may be subject to greater risks than a more diversified fund. A change in the value of any single holding may affect the overall value more than it would affect a diversified fund that holds more investments. In addition, the Fund's investments may subject shareholders to federal alternative minimum tax. The investment income from this Fund may be subject to state income taxes. Holdings and allocations shown are unaudited, and may not be representative of current or future investments.

Holdings and allocations may not include the Fund's entire investment portfolio, which may change at any time. Fund holdings should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities.

Commerce Kansas Tax-Free Intermediate Bond Holdings

Footnotes:

  1. The Net Asset Value represents the assets of the fund (ex dividend) by the total number of shares.
  2. Duration is the method determining a bond's price sensitivity, given changes in interest rates.
  3. The composition of the portfolio is subject to change in the future.
  4. The Fund's investments may subject shareholders to federal alternative minimum tax.
  5. Please click the links for additional disclosures.