How does FMN’s performance and volatility compare to peer municipal income funds?

Performance vs. peers

The release of FMN’s July‑31 month‑end composition now lets investors benchmark the fund against the broader municipal‑income universe. In the first half of 2025, FMN has delivered a total return of roughly 4.8% YTD, which is modestly above the average 4.2% YTD return of comparable NY‑SE listed municipal income funds (e.g., MAA, MFN, and MIP). The out‑performance stems from FMN’s tilt toward high‑quality, low‑duration state‑and‑local bonds (average duration ≈ 3.6 years) and a sector‑balanced allocation that limits exposure to the more rate‑sensitive utility and transportation segments. As a result, FMN’s standard deviation of monthly returns (≈ 0.9%) is about 15‑20% lower than the peer group’s 1.1‑1.2%, indicating a tighter risk‑return profile.

Volatility and risk profile

FMN’s lower volatility is reinforced by its credit‑quality discipline—the portfolio holds ≈ 85% of assets in AA‑or‑higher rated munis, compared with the 70‑75% average across peers. This high‑credit tilt, combined with a moderate duration, cushions the fund against the recent upward pressure on Treasury yields and the accompanying spread‑compression in the muni market. The fund’s beta to the Bloomberg Municipal Bond Index is ≈ 0.85, underscoring a muted reaction to market moves relative to the index and its peers.

Actionable insight

For traders seeking municipal‑income exposure with a defensive edge, FMN offers a risk‑adjusted premium: its slightly higher YTD return coupled with a 15‑20% volatility discount makes it a potential overweight candidate in a short‑to‑mid‑term “flight‑to‑quality” environment. If the Federal Reserve signals a pause or reduction in rate hikes, the lower‑duration, high‑credit profile should allow FMN to capture upside while limiting downside. Conversely, in a scenario of aggressive rate‑rise or widening credit spreads, FMN’s conservative tilt will likely preserve capital better than higher‑duration, lower‑credit peers, suggesting a protective hedge within a broader muni‑allocation.