Any investors hoping to find a Muni - Bonds fund might consider looking past Invesco High Yield Municipals A (ACTHX). ACTHX carries a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
ACTHX is one of many Muni - Bonds funds to choose from. Muni - Bonds funds invest in debt securities issued by states and local municipalities, which are typically used to pay for infrastructure construction, schools, and other government functions. These securities can be backed by taxes (revenue bonds), but others are known as " general obligation " and are not necessarily backed by a defined source. These bonds are especially attractive because of their inherent tax benefits.
History of Fund/Manager
ACTHX is a part of the Invesco family of funds, a company based out of Kansas City, MO. Invesco High Yield Municipals A made its debut in January of 1986, and since then, ACTHX has accumulated about $4.99 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 0.86%, and it sits in the bottom third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of -1.52%, which places it in the bottom third during this time-frame.
It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.
When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 43%, the standard deviation of ACTHX over the past three years is 10.19%. Looking at the past 5 years, the fund's standard deviation is 9.87% compared to the category average of -21%. This makes the fund more volatile than its peers over the past half-decade.
This fund has a beta of 1.06, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, ACTHX has a positive alpha of 0.6, which measures performance on a risk-adjusted basis.
Ratings
Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, ACTHX has 15.8% in medium quality bonds, with ratings of 'A' to 'BBB'. The fund has an average quality of BBB, and focuses on medium quality securities.
However, it is worth noting that 50 % of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, ACTHX is a load fund. It has an expense ratio of 1.54% compared to the category average of 0%. ACTHX is actually more expensive than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $50.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, Invesco High Yield Municipals A ( ACTHX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, worse downside risk, and higher fees, Invesco High Yield Municipals A ( ACTHX ) looks like a somewhat weak choice for investors right now.
This could just be the start of your research on ACTHXin the Muni - Bonds category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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