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 |  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
The Federal Reserve (Fed) held its policy rate steady at 4.25–4.5%, maintaining a cautious stance despite stronger than-expected job growth and persistent core Personal Consumption Expenditures (PCE) inflation at 2.7%. The Fed revised its economic projections, lowering expected Gross Domestic Product (GDP) growth while raising forecasts for both inflation and unemployment, signaling uncertainty around the macroeconomic outlook. Treasury and municipal (muni) yields showed mixed movements due to shifting investor expectations and macroeconomic concerns, with short-term rates falling and long-term rates rising. Market sentiment was shaped by fiscal and trade issues, centered on debates over tax legislation, elevated tariffs, and rising geopolitical risks including renewed Middle East tensions, all contributing to more cautious positioning heading into the second half of the year. The Treasury and municipal curves steepened during the quarter by 26 basis points (bps) and 34 bps, respectively. The 10-year Treasury yield increased slightly by 2 bps from 4.21% to 4.23% while the 10-year muni yield remained unchanged at 3.26%. The 10-year muni/ treasury ratio also remained at 77%. Demand for municipal bonds stayed healthy, supported by $9.5 billion in net fund inflows year-to-date, according to JP Morgan. The supply of tax-exempt debt remained strong, with $281 billion issued thus far. New issuance is up almost 15% year-over-year. Refunding deals made up 26% of new supply and taxable supply comprised 6.5%. Credit spreads ended wider quarter over quarter. In Q2, long-term maturities underperformed shorter ones, and lower-quality bonds lagged higher-quality ones. Bloomberg’s high yield muni index underperformed their investment grade index by 102 bps for the quarter.
For the second quarter, The Commerce Kansas Tax-Free Fund’s return of +0.65% underperformed the Bloomberg 3-15 Year Blend benchmark of +0.69%. Short durations were the most additive. The higher education, limited tax, and power sectors performed the best. Pre-refunded, hospital, and water/sewer sectors detracted.
| Total Fund Assets as of 3/31/2025 | $109,232,448 |
|---|---|
| Net Asset Value1 | $18.11 |
| Effective Duration2 | 5.74 Yrs |
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.