T. Rowe Price Virginia Tax-Free Bond Fund (PRVAX)
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 09/30/2014

Tax-free municipal bonds produced moderate gains and outperformed taxable bonds in the third quarter of 2014. Municipal debt moved roughly in tandem with longer-term Treasuries, whose interest rates declined, despite the Federal Reserve's tapering of its asset purchases, due to increased geopolitical risks and concerns about sluggish global economic growth. Steady demand for munis and generally limited supply were also favorable factors. Short- and intermediate-term Treasury note yields increased as investors began to anticipate the onset of Federal Reserve rate hikes around mid-2015. Shorter-term municipal yields rose to a lesser extent, however. Long-term and lower-quality municipals outperformed short-term and higher-quality issues, respectively, as investors sought securities with relatively attractive yields.

The Virginia Tax-Free Bond Fund returned 1.61% in the quarter compared with 1.80% for the Lipper Virginia Municipal Debt Funds Average. For the 12 months ended September 30, 2014, the fund returned 9.01% versus 7.73% for the Lipper Virginia Municipal Debt Funds Average. The fund's average annual total returns were 9.01%, 4.50%, and 4.44% for the 1-, 5-, and 10-year periods, respectively, as of September 30, 2014. The fund's expense ratio was 0.48% as of its fiscal year ended February 28, 2014.

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 have recently made notable additions to our holdings in the health care sector, which has typically been a good source of yield in the municipal market. More generally, we continued our emphasis on revenue sectors, favoring the relative security of specific claims on revenues versus the generic pledges of taxing power associated with general obligation bonds. Revenue sectors have also typically provided more yield.

We believe that the municipal bond market remains a high-quality market that offers good opportunities for long-term investors seeking tax-free income, though we acknowledge that it has become more challenging to find attractive yields outside of Puerto Rico and other distressed segments of the market. We remain concerned about the potential for rising rates, but we believe that further rate increases will be at a more measured pace than what we witnessed last year. 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. 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 investors well.

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