The Tax-Free Fund of Utah continues to fare well, despite a February dip, fund officials said Wednesday.
The fund, part of the Aquila Group of Funds, saw its Class A shares fall from $10.05 to $9.40 in February the worst drop in the fund's history caused by subprime borrowing, municipal bond insurers' credit standing and the Federal Reserve changing interest rates.
But Kimball Young, co-portfolio manager, told shareholders Wednesday that the fund recaptured more than 80 percent of those February losses in March and April. Class A shares have a net asset value of $9.72.
Young said the fund is not as volatile as the Dow. "Even if we compare the Tax-Free Fund for Utah to the 10-year Treasury, we look like pretty calm waters indeed, compared to the volatility in the Treasury market, as well," he said.
Young said the fund's future could be affected by changes in the alternative minimum tax, capital gains and income tax rates. "Our tax-free investments may become even more attractive if those things occur," he said.
The Tax-Free Fund for Utah is the only municipal bond fund in Utah that invests solely in municipal securities issued by state, county and community agencies to provide Utah shareholders with income that is exempt from both state and federal taxes. Its 340 holdings include Salt Lake City International Airport, the University of Utah and the Utah Transit Authority's light-rail system.
The fund has paid dividends totaling more than $48 million over the past 16 years, with $27.7 million being reinvested into the fund.