To achieve a tax-exempt dividend status for mutual funds in California, the fund must have at least what percentage of its assets invested in tax-exempt obligations?

In order for a mutual fund to be classified as tax-exempt for dividend purposes in California, it is required to have a significant percentage of its assets invested in tax-exempt obligations. The threshold is set at 50%. This means that at least half of the fund's assets must be allocated to investments that are exempt from California income tax. This rule encourages investment in municipal bonds and similar tax-exempt securities, providing a tax advantage to fund shareholders through tax-free dividends.

The percentages below this threshold do not meet the requirements set by tax law for the fund's dividends to qualify as tax-exempt. Therefore, only when a mutual fund reaches the 50% mark can it ensure that its dividends are fully exempt from state taxation, maximizing the financial benefit for its investors.