Is PRFHX a Strong Bond Fund Right Now?

Muni - Bonds fund seekers should consider taking a look at T. Rowe Price Tax Free High Yield Retail (PRFHX). PRFHX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

PRFHX 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

T. Rowe Price is based in Baltimore, MD, and is the manager of PRFHX. Since T. Rowe Price Tax Free High Yield Retail made its debut in March of 1985, PRFHX has garnered more than $1.95 billion in assets. The fund is currently managed by James M. Murphy who has been in charge of the fund since January of 2001.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 1.33%, and is in the middle third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3 -year annualized total return of -1.3%, which places it in the top 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. Over the past three years, PRFHX's standard deviation comes in at 8.78%, compared to the category average of 12.42%. Looking at the past 5 years, the fund's standard deviation is 8.7% compared to the category average of 13.05%. This makes the fund less volatile than its peers over the past half-decade.

PRFHX carries a beta of 0.94, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 0.41, which measures performance on a risk-adjusted basis.

Ratings

However, it is worth noting that 41 % of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, PRFHX is a no load fund. It has an expense ratio of 0.66% compared to the category average of 0.93%. So, PRFHX is actually cheaper than its peers from a cost perspective.

This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $100.

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, T. Rowe Price Tax Free High Yield Retail ( PRFHX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, T. Rowe Price Tax Free High Yield Retail ( PRFHX ) looks like a good potential choice for investors right now.

Don't stop here for your research on Muni - Bonds funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare PRFHX to its peers as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.

Free – 5 Dividend Stocks to Fund Your Retirement

Zacks Investment Research has released a Special Report to help you prepare for retirement with 5 diverse stocks that pay whopping dividends. They cut across property management, upscale outlets, financial institutions, and a couple of strong energy producers.

5 Dividend Stocks to Include in Your Retirement Strategy is packed with unconventional wisdom and insights you won’t get from your neighborhood financial planner.

Download Now – Today It’s FREE >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Get Your Free (PRFHX): Fund Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Tags

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.