Earlier this month, the Calvert Funds of Bethesda, Md. disclosed plans to merge a pair of its state-specific municipal bond funds into a larger fund. The funds' small sizes - the larger of the two had about $14 million in assets, according to a March 10 SEC filing - were cited as the reason for the proposed merger.

Calvert is not alone. Mergers and liquidations are becoming common events among municipal bond funds, particularly single-state municipal bond funds. As investors have chased high returns in equity funds, municipal bond funds have suffered record redemptions, contributing to a steady shrinking in the number of municipal bond fund offerings.

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