Is USATX a Strong Bond Fund Right Now?
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 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. Since USAA Tax-Exempt Intermediate-Term made its debut in March of 1982, USATX has garnered more than $3.03 billion in assets. The fund's current manager is a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 0.59%, and is 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 -1.8%, 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 5.73% compared to the category average of 12.84%. Looking at the past 5 years, the fund's standard deviation is 4.7% compared to the category average of 11.2%. This makes the fund less volatile than its peers over the past half-decade.
USATX carries a beta of 0.7, 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 0.17, 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 33.17% in high quality bonds rated at least 'AA' or higher, while 59.74% 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 0.53% compared to the category average of 0.79%. Looking at the fund from a cost perspective, USATX is actually cheaper than its peers.
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, USAA Tax-Exempt Intermediate-Term ( USATX ) looks like a good potential choice for investors right now.
This could just be the start of your research on USATXin the Mutual Fund Bond category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank 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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