Apex Municipal Bond Yield Fund¶
Fund Ticker: AMBYX | CUSIP: 00412Q-20-6 | ISIN: US00412Q2066
Inception Date: June 1, 2009 | Fiscal Year End: December 31
Benchmark: Bloomberg Municipal Bond Index
Fund Manager: Patricia Welling, CFA | Co-Manager: James Okafor, CFA
Total Net Assets: $2.67 billion (as of September 30, 2025)
Investment Objective¶
The Apex Municipal Bond Yield Fund seeks to provide shareholders with a high level of current income exempt from federal income tax, consistent with preservation of capital. The Fund is designed for investors in higher tax brackets who benefit from the federal tax exemption on municipal bond interest. As a secondary objective, the Fund seeks to preserve and grow the real purchasing power of invested capital over full market cycles.
The Fund targets a tax-equivalent yield premium of 75-125 basis points above the Bloomberg U.S. Aggregate Bond Index for an investor in the 37% federal marginal tax bracket.
Investment Strategy¶
The Fund invests at least 80% of its net assets in municipal securities whose interest is exempt from federal income tax, including the alternative minimum tax (AMT). The portfolio is constructed through a combination of top-down duration management and bottom-up credit selection.
Credit Quality Allocation: The Fund targets 60-75% of holdings in investment-grade securities (rated BBB-/Baa3 or above) and 25-40% in select below-investment-grade municipal bonds offering attractive risk-adjusted spreads. The Fund will not purchase securities rated below B-/B3 at the time of acquisition.
Sector Diversification: The Fund invests across the full spectrum of municipal issuers including general obligation bonds, revenue bonds (healthcare, transportation, utilities, education), pre-refunded bonds, housing authority issues, and industrial development bonds. No single state may exceed 15% of net assets, and no single issuer may exceed 3%.
Duration Management: The Fund maintains a modified duration range of 4.0-7.5 years, actively adjusted based on the team's assessment of interest rate trends, yield curve shape, and relative value across maturities. Current effective duration is 5.8 years as of September 30, 2025.
Yield Curve Positioning: The portfolio is structured using a barbell approach, overweighting the 2-5 year and 15-25 year maturity segments while underweighting intermediate maturities, capturing the steepest portions of the municipal yield curve.
The Fund may invest up to 20% of net assets in taxable municipal securities (Build America Bonds, taxable advance refunding bonds) when relative value is compelling. Interest rate futures and credit default swaps may be used in limited capacity for hedging portfolio risk.
Risk Factors¶
Investing in the Apex Municipal Bond Yield Fund involves the following risks:
Interest Rate Risk. Municipal bond prices move inversely to interest rates. Given the Fund's effective duration of approximately 5.8 years, a 100-basis-point increase in rates would result in an approximate 5.8% decline in the Fund's NAV, excluding income and convexity effects. The extended duration of many municipal bonds amplifies this sensitivity during rising-rate environments.
Credit Risk. The Fund's allocation to below-investment-grade municipal securities (25-40%) introduces the risk that issuers may fail to make timely principal and interest payments. Municipal defaults, while historically rare (0.08% cumulative 10-year default rate for investment-grade issues per Moody's), can be severe for individual holdings, particularly in the healthcare and special assessment sectors.
State and Local Government Risk. Municipal issuers face unique risks including declining tax bases, unfunded pension obligations, demographic shifts, and constitutional or statutory limitations on taxing authority. The fiscal distress of entities such as Detroit (2013) and Puerto Rico (2017) illustrate the potential severity of municipal credit deterioration.
Tax Risk. Changes to the federal tax code, including reductions in marginal income tax rates or elimination of the tax exemption for municipal bond interest, could reduce the relative attractiveness and market value of the Fund's holdings. The Fund's NAV could decline materially if legislative changes alter the tax-exempt status of municipal securities.
Liquidity Risk. The municipal bond market is predominantly an over-the-counter (OTC) dealer market with lower daily trading volume than comparable taxable fixed income markets. During periods of market stress, bid-ask spreads on municipal securities may widen significantly, potentially impairing the Fund's ability to sell holdings at fair value.
Call Risk. Many municipal bonds contain call provisions allowing the issuer to redeem the bonds prior to maturity, typically at par. In declining rate environments, called bonds force reinvestment at lower yields, reducing the Fund's income generation. Approximately 68% of Fund holdings are currently subject to call provisions.
Inflation Risk. Fixed coupon municipal bonds lose purchasing power during periods of elevated inflation. The Fund's nominal yield may not keep pace with inflation, resulting in negative real returns.
AMT Risk. A portion of the Fund's income (currently estimated at 8-12% of distributions) may be subject to the federal alternative minimum tax, reducing after-tax returns for affected shareholders.
Fee Schedule¶
| Fee Component | Rate |
|---|---|
| Management Fee | 0.48% of average daily net assets |
| 12b-1 Distribution Fee | 0.25% (Class A shares) |
| Other Expenses | 0.09% |
| Total Annual Expense Ratio | 0.82% (Class A) / 0.57% (Institutional) |
| Front-End Sales Load (Class A) | 3.75% on purchases under $100,000 |
| Contingent Deferred Sales Charge | None (Class A); 0.75% if redeemed within 12 months (Class C) |
| Redemption Fee | 1.00% on shares held fewer than 60 days |
Expense Example: An investor purchasing $10,000 in Class A shares would pay approximately $375 in front-end load plus $82 in annual expenses in the first year, totaling $457. Over 5 years, assuming 4% annual return and expense reinvestment, cumulative costs would approximate $935. Institutional class investors pay approximately $57 annually per $10,000 invested.
Historical Performance¶
Performance data as of September 30, 2025. Returns for periods greater than one year are annualized.
| Period | Fund (Class A, NAV) | Fund (Class A, w/ Load) | Bloomberg Muni Bond Index | Lipper General Muni Debt Avg |
|---|---|---|---|---|
| 1 Year | 6.84% | 2.83% | 5.97% | 5.42% |
| 3 Year | 2.18% | 0.87% | 1.56% | 1.21% |
| 5 Year | 3.47% | 2.69% | 2.91% | 2.63% |
| 10 Year | 4.12% | 3.72% | 3.58% | 3.24% |
| Since Inception (6/1/2009) | 4.89% | 4.64% | 4.31% | 3.97% |
| Risk Metric (5-Year) | Fund | Bloomberg Muni Bond Index |
|---|---|---|
| Standard Deviation | 6.41% | 5.87% |
| Sharpe Ratio | 0.32 | 0.27 |
| Beta | 1.06 | 1.00 |
| Max Drawdown | -12.83% | -11.44% |
| 30-Day SEC Yield | 3.94% | 3.41% |
| Tax-Equivalent Yield (37% bracket) | 6.25% | 5.41% |
Top 10 Holdings¶
As of September 30, 2025. Holdings are subject to change.
| Holding | Coupon / Maturity | Credit Rating | % of Net Assets |
|---|---|---|---|
| State of California GO Bonds | 5.00% / 2042 | Aa2/AA- | 3.12% |
| New York City Transitional Finance Auth | 4.75% / 2039 | Aaa/AAA | 2.87% |
| Texas Water Development Board | 5.25% / 2044 | Aaa/AAA | 2.64% |
| Illinois State GO Bonds | 5.50% / 2038 | Baa1/BBB+ | 2.41% |
| Massachusetts Bay Transit Authority | 4.50% / 2041 | Aa1/AA+ | 2.18% |
| Los Angeles Dept of Water & Power | 5.00% / 2045 | Aa2/AA | 2.03% |
| New Jersey Turnpike Authority Rev | 5.25% / 2040 | A2/A | 1.96% |
| Chicago O'Hare Airport Revenue | 4.75% / 2043 | A1/A+ | 1.84% |
| Florida Board of Education GO | 4.25% / 2037 | Aa1/AAA | 1.72% |
| Pennsylvania Turnpike Commission Rev | 5.00% / 2046 | A1/A+ | 1.61% |
| Top 10 Total | 22.38% |
Sector Allocation¶
| Sector | Fund Weight | Benchmark Weight |
|---|---|---|
| General Obligation | 24.8% | 27.3% |
| Healthcare Revenue | 16.2% | 12.4% |
| Transportation Revenue | 14.7% | 13.9% |
| Education Revenue | 11.3% | 10.8% |
| Utilities Revenue | 10.9% | 11.6% |
| Housing Revenue | 7.4% | 6.1% |
| Industrial Development | 5.8% | 4.2% |
| Pre-Refunded / Escrowed | 4.6% | 8.4% |
| Special Tax / Assessment | 2.8% | 3.1% |
| Other | 1.5% | 2.2% |
Tax Implications¶
The Fund is designed as a tax-efficient income vehicle for investors in higher federal tax brackets. Interest income distributed by the Fund is generally exempt from federal income tax but may be subject to state and local income taxes depending on the shareholder's state of residence.
Capital Gains Distributions: The Fund seeks to minimize capital gains realizations through strategic portfolio management. In the fiscal year ended December 31, 2024, the Fund distributed $0.12 per share in long-term capital gains and $0.04 per share in short-term capital gains. Portfolio turnover was 28% for the period, reflecting a buy-and-hold orientation.
Tax Efficiency Rating: Morningstar Tax Cost Ratio of 0.31% (3-year), placing the Fund in the 22nd percentile among municipal bond peers (lower is better). The Fund is highly tax-efficient relative to taxable fixed income alternatives.
AMT Exposure: Approximately 9.3% of Fund income in the most recent fiscal year was derived from private activity bonds subject to the federal alternative minimum tax. Shareholders subject to AMT should consult their tax advisors regarding the impact on their specific situations.
Qualified Dividend Income: Municipal bond interest does not qualify for the reduced QDI tax rate, as it is already exempt from federal income tax. Any taxable income distributed (from taxable municipals or capital gains) is taxed at ordinary income or capital gains rates as applicable.
Minimum Investment¶
| Share Class | Initial Investment | Additional Investment |
|---|---|---|
| Class A | $25,000 | $5,000 |
| Class C | $25,000 | $5,000 |
| Institutional | $500,000 | $25,000 |
| Retirement (IRA) | $10,000 | $2,500 |
Minimums may be waived for fee-based advisory programs and employer-sponsored retirement plans.
Redemption Terms¶
Redemption requests are processed at the NAV next calculated after receipt of the request in good order. The Fund calculates NAV once daily at 4:00 PM Eastern Time on each business day.
Settlement: Proceeds are typically remitted within T+1 business day for electronic redemptions and T+2 for check disbursements. The Fund reserves the right to delay payment for up to 7 calendar days for large redemptions per Rule 22c-1 under the Investment Company Act of 1940.
Early Redemption Fee: A 1.00% fee is assessed on shares redeemed within 60 days of purchase to discourage market-timing activity. Systematic withdrawal plans and hardship withdrawals may be exempt from this fee at the Fund's discretion.
In-Kind Redemptions: For redemptions exceeding $500,000 or 1% of Fund net assets, the Fund reserves the right to satisfy the redemption by distributing portfolio securities in lieu of cash, pursuant to Rule 18f-1 under the 1940 Act.
Important Disclosures¶
Past performance does not guarantee future results. Current performance may be lower or higher than quoted. The investment return and principal value of Fund shares will fluctuate; shares may be worth more or less than original cost upon redemption. For current performance data, visit www.apexfinancialpartners.com/performance.
The information provided constitutes neither an offer to sell nor a solicitation of an offer to buy shares of the Fund. Investors should read the Fund's prospectus carefully before investing. The prospectus, dated January 28, 2025, contains important information about the Fund's investment objectives, risks, charges, expenses, and other matters of interest.
The Fund is registered under the Investment Company Act of 1940. Apex Financial Partners serves as the investment adviser, registered with the SEC under the Investment Advisers Act of 1940. Shares are distributed by Apex Fund Distributors, LLC, member FINRA/SIPC.
Income from the Fund may be subject to state and local taxes and, for certain investors, the federal alternative minimum tax. Capital gains distributions are taxable. Consult your tax advisor for information regarding your specific tax situation.
Bloomberg Municipal Bond Index is an unmanaged index of investment-grade municipal bonds with maturities greater than one year. It is not possible to invest directly in an index.
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