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If you’ve been looking for mutual fund bond funds, consider Invesco High Yield Municipals Y (ACTDX) as an alternative. ACTDX maintains a Zacks Mutual Fund Rating of 2 (Buy), based on nine predictive factors such as size, expense and past performance.
Fund/manager history
Invesco is responsible for ACTDX, and the company is based out of Kansas City, MO. Since Invesco’s high-yield municipal debut in March 2006, ACTDX has amassed more than $2.04 billion in assets. A group of investment professionals is the current manager of the fund.
Performance
Investors naturally look for strong performing funds. This fund in particular delivered a 5-year annualized total return of 1.41%, placing it in the middle third of its category peers. But if you’re looking for a shorter time frame, it’s also worth looking at the 3-year annualized total return of -1.58%, which puts it in the middle third of that time frame.
When looking at a fund’s performance, it’s also important to note the standard deviation of returns. The lower the standard deviation, the lower the volatility of the fund’s experiences. The standard deviation of ACTDX over the last three years is 10.59% compared to the category average of 15.17%. The fund’s standard deviation over the past 5 years is 8.42% and the category average is 13.17%. This makes the fund less volatile than its peers over the past half-decade.
ACTDX carries a beta of 0.92, meaning the fund is less volatile than the broad market index of fixed income securities. Given this, it has a positive alpha of 0.08, which measures performance on a risk-adjusted basis.
Ratings
Investors should also consider the bond rating, which is a rating (from ‘AAA’ to ‘D’) assigned to a bond that indicates its credit quality. Considering this letter scale, ACTDX’s ‘Junk bond component-bonds’ rated ‘BB’ or below is -22.2%. This means the fund has an average rating of BBB, and focuses on medium quality securities.
However, it is worth noting that 53% of the bonds in this fund are underrated, so take the average quality rating with caution.
expenses
As expenses become increasingly important for mutual fund investments, it is key for investors to keep a close eye on expense-related metrics. Competition is heating up in this space, and a low-cost product can outperform its equivalent, all things being equal. In terms of fees, ACTDX is a no-load fund. It has an expense ratio of 0.92% compared to the category average of 0.79%. Therefore, ACTDX is more expensive than its peers in terms of costs.
Investors should note that the minimum initial investment for the product is $1,000 and each subsequent investment must be $50.
at last
Overall, Invesco High Yield Municipals Y (ACTDX) has a high Zacks Mutual Fund Rank, and with its comparable performance, low average risk and high payouts, this fund looks like a good choice for investors right now.
Be sure to go to www.zacks.com/funds/mutual-funds for more information on this product or to compare it to other mutual funds in bond mutual funds. Zacks offers a complete set of tools to help you analyze your portfolio – both funds and stocks – in the most efficient way possible.
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