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Is USATX a Strong Bond Fund Right Now?

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·3 min read
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On the lookout for a Mutual Fund Bond fund? Starting with USAA Tax-Exempt Intermediate-Term (USATX) is one possibility. USATX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine 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 $3.46 billion in assets, per the most up-to-date date available. The fund's current manager is a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. USATX has a 5-year annualized total return of 2.04% 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 0.72%, 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. USATX's standard deviation over the past three years is 5.07% compared to the category average of 11.32%. Over the past 5 years, the standard deviation of the fund is 4.14% compared to the category average of 9.96%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.69, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, USATX has a positive alpha of 0.26, 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 31.37% in high quality bonds rated at least 'AA' or higher, while 62.85% 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

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, USATX is a no load fund. It has an expense ratio of 0.54% compared to the category average of 0.79%. So, USATX is actually cheaper than its peers from a cost perspective.

Investors should also note that the minimum initial investment for the product is $3,000 and that each subsequent investment needs to be at $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, USAA Tax-Exempt Intermediate-Term ( USATX ) looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Mutual Fund Bond, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


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