The Vanguard New York State Long Term Tax Exempt Investor Fund is a fund that I personally own, and is made up primarily of bonds. There are actually two different versions of this particular New York State Long Term Tax Exempt; there are the investor and the admiral. The main difference between the two is that the New York State Tax Exempt Investor fund has a minimum investment of $300, while a New York State Tax Exempt Admiral fund has a minimum investment of $100,000.
The admiral fund also has an expense ratio of .12%, compared to the .20% expense ratio of the investor fund, as of February 2010. This fund has been managed by the Vanguard Fixed Income Group, which has been around since 1975, and who has managed the New York State Tax Exempt funds since its creation in 1986. The fund has total net assets of $3 billion as of the end of 2009. For these reasons, and many others I trust this fund very much.
This fund invests primarily in long term, high quality bonds. Despite this, the fund still has a risk rating of 3 from Vanguard, which means that it is fairly safe fund, but not as safe as say a New York State Tax Exempt Money Market fund. I have also owned the New York Tax Exempt money market in the past, and was disappointed with its earnings, so I have transferred that money, and added more to the Long Term Investor Fund. The reason this fund does have a risk rating of 3 on Vanguard is because it does fluctuate slightly, depending on how the market is doing, but overall doesn’t fluctuate very much. In order for you to really lose money on this fund, the market would have to crash significantly.
Overall, I would recommend this fund, as I’ve made some nice dividends from it. However, you could be earning more if you invest your money in a mutual fund, or individual stocks. However, if you’re looking for some tax exempt income, especially for those in a high tax bracket, this is a good fund as it still earns good dividends, tax free. Before investing in any fund, it is always best to do your own research, and maybe talk to your financial advisor if you’re concerned, as it’s best to find out what investments are right for you, before spending large amounts of money.