Tax-free municipal bonds produced strong returns in the third quarter, outperforming taxable bonds. Munis are one of the best-performing asset classes year-to-date, remaining relatively well insulated against the pressures that higher-risk assets have faced. Tax-free bonds rallied and yields fell after the Federal Reserve opted not to increase short-term rates at its September meeting, as adverse international developments offset ongoing improvements in the labor market. Municipal bond issuance slowed later in the quarter, but totals through the first nine months of the year were ahead of 2015's pace as muni issuers have been taking advantage of low borrowing costs to refinance older, higher-cost debt. Longer-maturity municipals generally outperformed shorter-maturity issues.
The Summit Municipal Intermediate Fund returned 1.59% in the quarter compared with 1.51% for the Barclays Intermediate Competitive (1−17 yr maturity) Bond Index and 1.05% for the Lipper Intermediate Municipal Debt Funds Average. For the 12 months ended September 30, 2015, the fund returned 2.53% versus 2.61% for the Barclays Intermediate Competitive (1−17 yr maturity) Bond Index and 1.38% for the Lipper Intermediate Municipal Debt Funds Average. The fund's average annual total returns were 2.53%, 3.56%, and 4.27% for the 1-, 5-, and 10-year periods, respectively, as of September 30, 2015. The fund's expense ratio was 0.50% as of its fiscal year ended October 31, 2014.
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Our security selection within the revenue-backed debt sector contributed to relative results, particularly our holdings in the transportation and special tax subsectors. We prefer revenue bonds in general because they offer the relative security of specific claims on revenues versus the generic pledges of taxing power associated with general obligation bonds. The fund's duration, which is a measure of sensitivity to interest rate changes, was slightly longer than the benchmark's duration. This positioning was beneficial as the yields of longer-maturity bonds decreased. As always, we focus on finding attractively valued bonds issued by municipalities with good long-term fundamentals.
We believe that the municipal bond market remains a high-quality market that offers good opportunities for long-term investors seeking tax-free income. While fundamentals are sound overall and technical support should persist, there could be hurdles in the months ahead. In particular, with the Fed preparing to tighten monetary policy, we are mindful that rising rates would likely weaken the appetite for bonds with higher interest rate risk. However, with the Fed likely to act cautiously, the transition to higher rates may not be as painful as some fear. Ultimately, we believe T. Rowe Price's independent credit research is our greatest strength and will remain an asset for our investors as we navigate the current market environment.