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Is HICOX a Strong Bond Fund Right Now?

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·3 min read
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There are plenty of choices in the Muni - Bonds category, but where should you start your research? Well, one fund that might be worth investigating is Colorado Bond Shares Tax-Exempt A (HICOX). HICOX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

HICOX 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

Freedom Funds is based in Denver, CO, and is the manager of HICOX. The Colorado Bond Shares Tax-Exempt A made its debut in June of 1987 and HICOX has managed to accumulate roughly $1.63 billion in assets, as of the most recently available information. The fund is currently managed by Fred R. Kelly Jr. who has been in charge of the fund since November of 1990.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 4.86%, and it sits in the top 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 5.21%, 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. HICOX's standard deviation over the past three years is 3.65% compared to the category average of 3.14%. Over the past 5 years, the standard deviation of the fund is 3.01% compared to the category average of 3.17%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.33, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, HICOX has a positive alpha of 2.48, which measures performance on a risk-adjusted basis.

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, HICOX is a load fund. It has an expense ratio of 0.65% compared to the category average of 0.79%. Looking at the fund from a cost perspective, HICOX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $500 and that each subsequent investment has no minimum amount.

Bottom Line

Overall, Colorado Bond Shares Tax-Exempt A ( HICOX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on the Muni - Bonds area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into HICOX too 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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