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National Tax-Free Intermediate Bond Fund
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
LOW - - • - - - - HIGH
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
The Federal Reserve (the Fed) kept its policy rate steady at 4.50% during their March meeting, citing strong economic data with unemployment at 4.1%, Gross Domestic Product (GDP) growth for 2024 hitting 2.5%, and inflation moderating above target also at 2.5% year-over-year. However, their updated projections for 2025 showed slower growth, a rise in unemployment, and an increase in inflation expectations. The Fed is taking a “wait-and-see” approach as President Trump’s tariff plans are implemented, spending cuts are made, and extension of the 2017 tax cuts are considered. The Fed also decided to slow its balance sheet runoff by reducing Treasuries purchases, while leaving the cap on agency mortgage securities unchanged. The Treasury curve flattened while the municipal (muni) curve steepened during the quarter. The 10-year Treasury yield dropped 36 basis points (bps) from 4.57% to 4.21% while the 10-year muni yield rose 20 bps from 3.06% to 3.26%. The 10-year muni/treasury ratio increased to 77%. Demand for municipal bonds stayed healthy, supported by $9.8 billion in net fund inflows year-to-date, according to JP Morgan. The supply of tax-exempt debt remained strong, with $119 billion issued in Q1. New issuance is up almost 14% year-over-year. Refunding deals made up 25% of new supply and taxable supply comprised 6%. Credit spreads ended slightly tighter quarter over quarter. In Q1, long-term maturities underperformed shorter ones, and lower-quality bonds continued to be in favor over higher-quality ones.
For the first quarter, The Commerce National Tax-Free Fund’s return of +0.15% underperformed the Bloomberg 3-15 Year Blend benchmark of +0.33%. Short durations were the most additive. The Fund’s exposures to the Industry Development Revenue (IDR)/Pollution Control Revenue (PCR), housing, and not-for-profit sectors performed the best. Water/sewer, limited tax and higher education sectors detracted.
| Total Fund Assets as of 3/31/2025 | $348,643,353 |
|---|---|
| Net Asset Value1 | $18.46 |
| Effective Duration2 | 6.06 Yrs |
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, and investment income may be subject to state income taxes.
Portfolio Holdings
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 Holdings
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.