T. Rowe Price New Jersey Tax-Free Bond Fund (NJTFX)

Overview

The investment aims to deliver the highest level of income that is exempt from both federal and New Jersey state income taxes, focusing on prudent portfolio management. This goal is sought through primarily investing in investment-grade municipal bonds within New Jersey. The fund operates under a strategy to invest a minimum of 80% of its net assets, this includes any leverage from borrowing for investment purposes, in bonds whose interest earnings are exempt from federal and New Jersey state income taxes. Moreover, it aims for at least 80% of the fund's income to be exempt from these taxes as well. The fund is classified as non-diversified, meaning it may invest more of its assets in fewer issuers than a diversified fund.

Products and Services

• Investment-grade New Jersey Municipal Bonds

These are bonds issued by various entities within the state of New Jersey, such as cities, counties, and other governmental bodies, that are assessed to have a relatively low risk of default. Investing in these bonds is the fund's primary strategy for generating income that is exempt from federal and New Jersey state income taxes. The focus on investment-grade bonds is indicative of a strategy that places a premium on minimizing risk while seeking to provide favorable tax-exempt income.

• Tax-exempt Income Generation

The fund is tailored for investors looking for income that is not subject to federal and New Jersey state income taxes. By strategically investing in municipal bonds that offer tax-exempt interest, the fund seeks to optimize its returns in a manner that is efficient for investors subject to these taxes, thus enhancing the attractiveness of the income it generates. This approach is particularly beneficial for high-net-worth individuals and others in higher tax brackets seeking to mitigate their tax liabilities.

• Non-diversified Investment Strategy

As a non-diversified fund, it places larger investments in fewer issuers compared to diversified funds. This approach can lead to higher yields and greater income potential due to the increased risk associated with less diversification. However, it also means that the fund may be more vulnerable to fluctuations in the value of its holdings, as the performance of fewer issuers has a more significant impact on the fund's overall performance.