FPXTX

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prk
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FPXTX

Post by prk »

I want to invest in bonds outside of tax sheltered accounts, so want to minimize taxes. I live in PA.

How is FPXTX for that purpose?

The returns seem low.

Would I be better off in a traditional total bond market fund and just pay the taxes?
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ResearchMed
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Re: FPXTX

Post by ResearchMed »

prk wrote: Mon Feb 03, 2025 7:52 am I want to invest in bonds outside of tax sheltered accounts, so want to minimize taxes. I live in PA.

How is FPXTX for that purpose?

The returns seem low.

Would I be better off in a traditional total bond market fund and just pay the taxes?

Please give the mutual fund NAME.
Many of us here may not know what it is.
And if some people who *might* have been able to give some helpful advice don't read this thread because they don't want to look it up, then you've possibly missed some helpful information.

RM
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retiredjg
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Re: FPXTX

Post by retiredjg »

The answer depends greatly on your tax bracket.
corpmd
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Re: FPXTX

Post by corpmd »

Fidelity Pennsylvania Municipal Income Fund (FPXTX).
Also look at Vanguard Pennsylvania Long-Tern Tax-Exempt Fund Investor shares.

As a Pennsylvania resident I invested in both. (Moved out now)

You will get lots of advice about calculating whether to invest in state funds here. It’s an easy calculation based on your marginal tax rate.

Duration for VPAIX is 7.63 years and 7.2 years for FPXTX

Fidelity expense ratio is 0.47 VPAIX is 0.17%. You have to pay $75 to but a Vanguard fund at Fidelity but that is a quick wash if you buy enough shares with the 0.3% difference in expense ratio.

I used both over time while a resident. VPAIX provided a rich source of tax loss harvesting in the bond market downturn … so a bit of the return argument became moot. And on that front the longish duration is a risk to balance against other funds.
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Cocoa Beach Bum
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Re: FPXTX

Post by Cocoa Beach Bum »

corpmd wrote: Mon Feb 03, 2025 2:06 pm...
Fidelity expense ratio is 0.47 VPAIX is 0.17%. You have to pay $75 to but a Vanguard fund at Fidelity but that is a quick wash if you buy enough shares with the 0.3% difference in expense ratio.
...
Just a slight correction - Fidelity now charges a $100 transaction fee to purchase VPAIX.
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grabiner
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Re: FPXTX

Post by grabiner »

corpmd wrote: Mon Feb 03, 2025 2:06 pm Fidelity expense ratio is 0.47 VPAIX is 0.17%. You have to pay $75 to but a Vanguard fund at Fidelity but that is a quick wash if you buy enough shares with the 0.3% difference in expense ratio.
Fidelity's fund is not worthwhile for PA residents. You can buy a national muni fund or ETF at a much lower expense, such as Vanguard's VTEB at 0.03% (commission free at Fidelity). You will pay PA tax on national funds, but not enough to cover the 0.44% expense difference, so a low-cost national fund of the same risk level will have higher after-tax returns.

The Vanguard fund expenses are down to 0.14% now, so if you do use Vanguard, the Vanguard fund should return slightly more after tax than a national fund of comparable risk. And when you get to $50K in the fund, you can use Admiral shares at 0.09%.

Whether any muni fund makes sense depends on your tax bracket. In a 24% or lower bracket, you are probably better off with a Treasury fund, which is exempt from PA state tax and less risky than a muni fund. In a 32% or higher bracket, you are probably better off with a muni fund.
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arcticpineapplecorp.
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Re: FPXTX

Post by arcticpineapplecorp. »

prk wrote: Mon Feb 03, 2025 7:52 am Would I be better off in a traditional total bond market fund and just pay the taxes?
tax equivalent yield calculator:
https://www.eatonvance.com/tax-equivale ... ulator.php
https://digital.fidelity.com/prgw/digital/taxyieldcalc/
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grabiner
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Re: FPXTX

Post by grabiner »

arcticpineapplecorp. wrote: Tue Feb 04, 2025 8:32 pm
prk wrote: Mon Feb 03, 2025 7:52 am Would I be better off in a traditional total bond market fund and just pay the taxes?
tax equivalent yield calculator:
https://www.eatonvance.com/tax-equivale ... ulator.php
https://digital.fidelity.com/prgw/digital/taxyieldcalc/
However, tax-equivalent yield isn't the whole story. If a municipal-bond fund and a Treasury fund of the same duration have the same after-tax yield, the Treasury fund is a better investment because it is less risky.

This is the reason for my 25% rule of thumb. If muni and taxable funds of the same risk have equal after-tax yields at a 25% tax rate, then you should prefer munis if your marginal tax rate is higher than 25%. (For in-state munis versus Treasuries, use only the federal tax rate. For out-of-state munis versus Treasuries, use the difference between your federal and state rates.)
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arcticpineapplecorp.
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Re: FPXTX

Post by arcticpineapplecorp. »

grabiner wrote: Tue Feb 04, 2025 8:45 pm
However, tax-equivalent yield isn't the whole story. If a municipal-bond fund and a Treasury fund of the same duration have the same after-tax yield, the Treasury fund is a better investment because it is less risky.

This is the reason for my 25% rule of thumb. If muni and taxable funds of the same risk have equal after-tax yields at a 25% tax rate, then you should prefer munis if your marginal tax rate is higher than 25%. (For in-state munis versus Treasuries, use only the federal tax rate. For out-of-state munis versus Treasuries, use the difference between your federal and state rates.)
good point.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
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