National Tax-Free Intermediate Bond Fund
ObjectiveSeeks current income exempt from federal income tax consistent with the preservation of capital.
StrategyFocuses on a broad range of investment-grade municipal securities, typically issued by or on behalf of the states, territories and possessions of the United States, the District of Columbia, and their respective authorities, agencies, instrumentalities and political subdivisions.
Brian P. Musielak, CFA
- Joined Commerce in 1995
- 26 years of experience
- Fund Manager since 1999
LOW - - • - - - - HIGH
In general, greater returns are associated with greater risks.
|Minimum Initial Investment||$1,000|
|Total Fund Assets as of 3/31/2023||$383,267,134|
|Net Asset Value1||$18.71|
|Effective Duration2||5.4 Yrs|
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, and investment income may be subject to state income taxes.
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 guarantee on U.S. government securities applies only to the underlying securities of the Fund if held to maturity and not to the value of the Fund's shares. Mortgage-backed securities are subject to prepayment risks. These risks may result in greater share price volatility.
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 National Tax-Free Intermediate Bond HoldingsFebruary 2023*
A prospectus for the Commerce Funds containing more complete information may be obtained by calling 1-800-995-6365 or by downloading it from this website. Please consider a Fund's objectives, risks, and charges and expenses, and read the prospectus carefully before investing. The prospectus contains this and other information about the Fund.
The mutual funds referred to in this Web site are offered and sold only to persons residing in the United States and are offered by prospectus only. The prospectus contains more complete information about the funds, including charges and expenses, and should be read carefully before investing.
The method of calculation of the 30-Day Standardized Subsidized Yield is mandated by the Securities and Exchange Commission and is determined by dividing the net investment income per share earned during the last 30 days of the period by the maximum public offering price (“POP”) per share on the last day of the period. This number is then annualized. The 30-Day Standardized Subsidized Yield reflects fee waivers and/or expense reimbursements recorded by the Fund during the period. Without waivers and/or reimbursements, yields would be reduced. This yield does not necessarily reflect income actually earned and distributed by the Fund and, therefore, may not be correlated with the dividends or other distributions paid to shareholders. The 30-Day Standardized Unsubsidized Yield does not adjust for any fee waivers and/ or expense reimbursements in effect. If the Fund does not incur any fee waivers and/or expense reimbursements during the period, the 30-Day Standard Subsidized Yield and 30-Day Standardized Unsubsidized Yield will be identical.
The Federal Reserve (The Fed) continued to address inflation by increasing their benchmark interest rate by 25 basis points (bps) in March up to 5%. The market initially expected another increase of at least 50 bps, however, banking turmoil returned to markets with the failure of Silicon Valley Bank and the introduction of a new liquidity facility, the Bank Term Funding Program. This was not limited to the domestic banking system as Credit Suisse was absorbed by UBS in a transaction facilitated by the Swiss government to regain confidence globally. Concerns over the banking sector sent yields lower during the quarter, with significant moves lower in the front-end of the curve especially in March. The US Treasury curve flattened, and the municipal curve steepened; yields decreased notably in the front-end for both Treasuries and munis during the quarter. Municipal bonds underperformed US Treasuries in 1Q. The 10-year Treasury yield decreased 41 bps from 3.88% to 3.47% while the 10-year municipal yield decreased 36 bps from 2.63% to 2.27% during the quarter. The 10-year muni/treasury ratio decreased to 65%. New issuance supply decreased almost 32% year-over-year, ending the quarter at over $75 billion. Refunding deals made up just 18% of new supply and taxable supply comprised 16%. Credit spreads ended the quarter flat. Lower quality bonds underperformed their higher quality counterparts slightly. Bloomberg Barclay’s high yield muni index underperformed their investment grade index by 5 bps for the quarter. Longer bonds outperformed shorter bonds while GO (General Obligation) bonds underperformed revenue sectors.
For the first quarter, The Commerce National Tax-Free Fund’s return of 2.25% underperformed the Bloomberg 3-15 Year Blend benchmark of 2.40%. Longer maturities were the most additive. Lease, housing, and limited tax sectors performed the best. The Fund’s exposures to the pre-refunded, water/sewer and higher education sectors detracted.