There are plenty of choices in the Mutual Fund Bond category, but where should you start your research? Well, one fund that might be worth investigating is USAA Tax-Exempt Intermediate-Term (USATX). USATX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
History of Fund/Manager
Victory is based in Columbus, OH, and is the manager of USATX. USAA Tax-Exempt Intermediate-Term made its debut in March of 1982, and since then, USATX has accumulated about $2.97 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 1.91%, and it sits in the top 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 1.26%, which places it in the top third during this time-frame.
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. The standard deviation of USATX over the past three years is 5.62% compared to the category average of 12.13%. The standard deviation of the fund over the past 5 years is 5.12% compared to the category average of 11.82%. This makes the fund less volatile than its peers over the past half-decade.
USATX carries a beta of 0.79, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a negative alpha of -0.11, 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, USATX has 20.46% in high quality bonds rated at least 'AA' or higher, while 69.49% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.
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, USATX is a no load fund. It has an expense ratio of 0.50% compared to the category average of 0.78%. So, USATX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $3,000, investors should also note that each subsequent investment needs to be at least $50.
Bottom Line
Overall, USAA Tax-Exempt Intermediate-Term ( USATX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
Don't stop here for your research on Mutual Fund Bond 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 USATX to its peers 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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