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

Long-term Treasury yields rose sharply during the quarter as resilient economic growth, persistent inflation, heavy government borrowing and strong demand for capital from the AI investment cycle pushed the term premium higher. The 10-year Treasury yield climbed to its highest level since 2002, creating a challenging backdrop for fixed income markets and particularly longer-duration securities. Geopolitical tensions involving Iran and the Strait of Hormuz added to inflationary pressures as Brent crude again moved above $100 per barrel. Against this backdrop, the Federal Reserve raised its target rate by 25 basis points (bps) to 3.75–4.00% in September, its first increase since 2023, while maintaining a higher projected path for rates and inflation. Despite tighter financial conditions, economic growth remained resilient, supported by business investment and consumer spending. The Treasury curve steepened 11 bps and the municipal (muni) curve flattened by 23 bps during the quarter. The 10-year Treasury yield increased by 82 bps from 4.47% to 5.29% and the 10-year muni yield increased by 115 bps from 2.95% to 4.10%. The 10-year muni/treasury ratio increased to 78%. Demand for municipal bonds continued at a strong pace, supported by nearly $75 billion in net fund inflows year-to-date, according to JP Morgan. A healthy supply of tax-exempt debt persisted with roughly $163 billion issued in Q3, now at $458 billion for the year. New issuance is up over 4.5% year-over-year. Refunding deals made up over 28% of new supply and taxable supply comprised over 5%. In Q3, long-term maturities underperformed shorter maturities, and lower-quality bonds outpaced higher-quality counterparts. Revenue bonds underperformed while credit spreads finished tighter for the quarter. Bloomberg’s high yield muni index outperformed their investment grade index by 80 bps.

For the third quarter, The Commerce Kansas Tax-Free Fund’s return of -5.45% underperformed the Bloomberg 3-15 Year Blend benchmark of -5.40%. Longer durations detracted the most. The Fund’s cash position and exposures to the higher education and housing sectors performed the best. Power, water/sewer, and GO sectors lagged.

 
 
Total Fund Assets as of 9/30/2026 $78,189,041
Net Asset Value1 $17.38
Effective Duration2 6.84 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.