Is USATX a solid bond fund right now?
If you’ve been stuck on finding Muni-Bonds, consider the option for USAA Tax-Exempt Intermediate Term (USATX). USATX carries a Zacks Mutual Fund rank of 1 (strong buy), which is based on nine forecasting factors such as size, cost, and past performance.
Zacks classifies USATX as Muni – Bonds, which is a segment filled with options. Muni – Bonds funds invest in debt securities issued by states or local municipalities. These are typically used to finance the construction of infrastructure, pay for schools or other government functions. Some are tax-backed (fiscal obligations), while others are “general obligations” and may not be backed by a defined source. Investors generally appreciate the tax benefits that come with many municipal bonds, which are particularly impressive for high tax brackets.
Fund / manager history
Victory is responsible for USATX and the company is based in Columbus, OH. Since the USAA Tax-Exempt Intermediate-Term debuted in March 1982, USATX has raised over $ 4.05 billion in assets. The current fund manager is a team of investment professionals.
Of course, investors look for strong performance in funds. This particular fund delivered a 5-year total annualized return of 3.28%, and it sits in the top third among its peers in the category. But if you’re looking for a shorter timeframe, it’s also worth looking at its 3-year annualized total return of 5.07%, which puts it in the top third over that timeframe.
When looking at the performance of a fund, it is also important to note the standard deviation of returns. The lower the standard deviation, the less volatility the fund experiences. The standard deviation of USATX over the past three years is 4.28% compared to the category average of 9.5%. The fund’s standard deviation over the past 5 years is 4.1% compared to the category average of 8.13%. This makes the fund less volatile than its peers over the past half decade.
USATX has a beta of 0.57 which means the fund is less volatile than a large fixed income market index. With that in mind, it has a negative alpha of -0.26, which measures performance on a risk-adjusted basis.
Investors should also consider a bond’s rating, which is a rating (“AAA” to “D”) assigned to a bond that indicates its credit quality. With this letter scale in mind, USATX has 27.78% high quality bonds rated at least “AA” or higher, while 65% are medium quality, with ratings from “A” to “BBB”. “. The fund has an average quality of A and focuses on high quality securities.
For investors, it is essential to take a closer look at the parameters related to costs, as costs are increasingly important for mutual funds. Competition is intensifying in this space, and a lower-cost product is likely to outperform its otherwise identical counterpart, all other things being equal. In terms of fees, USATX is a no-load fund. It has an expense ratio of 0.48% compared to the category average of 0.80%. So, USATX is actually less expensive than its peers from a cost perspective.
This fund requires a minimum initial investment of $ 3,000 and each subsequent investment must be at least $ 50.
At the end of the line
Overall, USAA Tax-Exempt Intermediate-Term (USATX) ranks high as a Zacks Mutual Fund, and in conjunction with its comparatively strong performance, medium downside risk, and lower fees, USAA Tax-Exempt Intermediate- Term (USATX) looks like a good potential choice for investors right now.
This might just be the start of your search for USATX under the Muni – Bonds category. Be sure to visit www.zacks.com/funds/mutual-funds for more information on this fund, and all the others that we also rank for more information. Want to know more? We have a full suite of equity tools you can use to find the best choices for your portfolio, no matter what type of investor you are.
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