T. Rowe Price Georgia Tax-Free Bond Fund (GTFBX)
Ticker Symbol:
Fund Status:
Open to new Retail investors  /  Open to subsequent Retail investments
Fund Management
Fund Manager
  • Hugh D. McGuirk
  • Managed Fund Since: 02/28/1997
  • Joined Firm On 09/27/1993*
  • B.S., University of Virginia; M.B.A., Harvard Business School

*Firm refers to T. Rowe Price Associates and Affiliates
Quarterly Commentaries
as of 12/31/2013

Tax-free municipal bonds outperformed taxable bonds in the fourth quarter. Intermediate- and long-term Treasury interest rates increased as the economy continued expanding and as Congress agreed late in the year on a two-year budget deal that could add slightly to 2014 economic growth. More significantly, the Federal Reserve announced in mid-December that it will begin to curtail its $85 billion monthly asset purchases in January. The 10-year Treasury note yield rose to 3.03% by the end of 2013, the highest level in about two-and-a-half years. In the municipal market, long-term interest rates increased, but not as much as Treasury yields, while shorter-term yields declined or were flat. BBB rated municipals in the investment-grade universe fared worse than higher-quality tiers.

The Georgia Tax-Free Bond Fund returned 0.51% in the quarter compared with −0.16% for the Lipper Other States Municipal Debt Funds Average. For the 12 months ended December 31, 2013, the fund returned −2.95% versus −5.01% for the Lipper Other States Municipal Debt Funds Average. The fund's average annual total returns were −2.95%, 5.95%, and 3.74% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2013. The fund's expense ratio was 0.53% as of its fiscal year ended February 28, 2013.

For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.

Benchmark Definitions

We continue to conduct thorough research and assign our own independent credit ratings before making investment decisions. As always, we are on the lookout for attractively valued bonds issued by municipalities with good long-term fundamentals, an investment strategy that we believe will continue to serve our long-term investors well. We continue to believe that revenue-backed debt and long-term bonds offer the most attractive value. Our most significant sector allocation is to hospitals, and we added modestly to our allocation during the quarter. Although we continue to favor lower-quality investment-grade debt, higher-yielding opportunities remain scarce in the state. One of the ways in which we have added yield in the portfolio has been through a modest allocation to prepaid gas securities.

The decline in municipal bond prices in 2013 has rattled some investors, but it does not represent a fundamental change in the nature, quality, or risk characteristics of the market. We continue to believe that it is a high-quality market, with good investment opportunities for those with a long-term focus and attractive tax-free income, particularly for those in the highest tax brackets, in what is still a very low interest rate environment. The underperformance of long-term munis in 2013 makes their nominal and taxable-equivalent yields more attractive, but if market outflows persist and rates resume rising, further price declines are likely.

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