ETF Report: American Century Diversified Municipal Bond ETF (TAXF)

What this ETF is trying to do

The American Century Diversified Municipal Bond ETF, known by its ticker symbol TAXF, is an exchange-traded fund. This type of fund focuses on municipal bonds. These are loans made to local governments.

What the numbers show

As of July 10, 2026, the current price of one share is $50.549. Looking back at the last year, the price has grown by about 3.5%. When you include the extra money paid out to investors, the total return for the year was about 7.5%.

To see how this works with a real amount of money, let's look at an example. Imagine you invested $10,000 exactly one year ago when the estimated price was about $48.84 per share. Before counting any extra payments, your $10,000 would now be worth roughly $10,350 based on the price change alone.

Income and distribution explanation

This ETF pays out money to investors, which is called a "distribution." Over the last 12 months, it paid out a total of $1.9144 per share. These payments usually happen every month, and there were 12 payments in the last year. The distribution yield is 3.7872%.

It is important to remember that a high yield alone can be misleading. A high percentage might look good, but you must also look at whether the price of the ETF is staying steady or falling.

NAV erosion explanation

"NAV erosion" is a term used when the value of the fund's underlying assets drops over time. Think of it like a bucket with a small hole in the bottom; even if you keep pouring water (income) in, the level of the water (the share price) keeps getting lower.

If an ETF has severe erosion, the share price can fall from a high price to a much lower price. This can destroy your "principal," which is the original money you put in. However, this ETF has a "Stable / sideways" label and a good erosion score of 94. This means it does not show signs of severe price collapse.

Pros

• The fund shows a history of total returns over one, three, and year-to-date periods.

• It provides regular monthly income.

• The price has remained stable rather than crashing.

Cons

• Investors must monitor the yield to ensure the price isn't dropping too fast.

Beginner takeaway

Income investors usually prefer ETFs that go "sideways" (stay at a steady price) or move slightly up. They prefer this because they want to collect their monthly payments without losing the original money they invested. Because TAXF has shown stable movement, it avoids the danger of the price collapsing.