The Fund invests in a broadly diversified portfolio of federally tax-exempt municipal obligations. The Fund normally invests at least 80% of its net assets in municipal bonds and may invest in all types including pre-refunded bonds, general obligation bonds, revenue bonds, municipal lease participations and zero coupon bonds. Baird uses a value-oriented strategy and looks for undervalued municipal securities that offer above-average return characteristics. Market factors evaluated when selecting investments include:
- the nominal level and trend in interest rates
- the slope of the municipal yield curve
- income tax rates
- market sector valuations
- credit trends
- supply and demand flows
- regional economic strength
- legal and regulatory trends
The Fund invests primarily in investment-grade municipal obligations but may invest up to 15% of its assets in non-investment-grade obligations.
Performance data quoted represents past performance. Past performance does not guarantee future results. Investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The funds' current performance may be lower or higher than the performance data quoted.
Because the Fund may invest more than 25% of its total assets in municipal obligations issued by entities located in the same state or the interest on which is paid solely from revenues of similar projects, changes in economic, business or political conditions relating to a particular state or types of projects may have a disproportionate impact on the Fund. A bond's market value may be affected significantly by changes in interest rates – generally, when interest rates rise, the bond's market value declines and when interest rates decline, its market value rises ("interest rate risk").
Bloomberg Barclays Municipal Bond Index is a broad market performance benchmark for the tax-exempt bond market, the bonds included in this index must have a minimum credit rating of at least Baa.