Overview
| Objective | Seeks current income exempt from federal income tax consistent with the preservation of capital. |
|---|---|
| Strategy | Focuses 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. |
| 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 | 02/21/95 |
|---|---|
| Ticker Symbol | CFNLX |
| Cusip | 200626703 |
| 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 National Tax-Free Fund’s return of +1.83% outperformed the Bloomberg 3-15 Year Blend benchmark of +1.74%. Longer durations were the most additive. The Fund’s exposures to the power, General Obligation (GO), and student loan sectors performed the best. Pre-refunded, water/sewer, and IDR/PCR sectors lagged.
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.