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On the lookout for a Muni - Bonds fund? Starting with Franklin California High Yield Municipals A (FCAMX - Free Report) is one possibility. FCAMX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify FCAMX in the Muni - Bonds category, an area rife with potential choices. Muni - Bonds funds focus their investments on debt securities issued by state and local governments. These are typically used to pay for the construction of infrastructure, the operation of public schools, and other municipal functions. These securities can come in the form of revenue bonds, which are backed by taxes, as well as " general obligation " bonds that are not backed by a defined source. Investors are usually interested that come with most municipal bonds, which can be especially important for those in higher tax brackets.
History of Fund/Manager
Franklin Templeton is based in San Mateo, CA, and is the manager of FCAMX. Franklin California High Yield Municipals A made its debut in May of 1993, and since then, FCAMX has accumulated about $1.40 billion in assets, per the most up-to-date date available. The fund's current manager, John Wiley, has been in charge of the fund since May of 1993.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. FCAMX has a 5-year annualized total return of 4.89% 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 6.11%, 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. The standard deviation of FCAMX over the past three years is 2.98% compared to the category average of -15.58%. The fund's standard deviation over the past 5 years is 4.03% compared to the category average of -3.21%. This makes the fund more volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
For those that believe interest rates will rise, this is an important factor to consider. FCAMX has a modified duration of 6.29, which suggests that the fund will decline 6.29% for every hundred-basis-point increase in interest rates.
Income
Income is often a big reason for purchasing a fixed income security, so it is important to consider the fund's average coupon. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 5.07% means that a $10,000 investment should result in a yearly payout of $507.
For those seeking a strong level of current income, a higher coupon is typically good news. However, it could pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks. FCAMX carries a beta of 0.9, 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 0.61, 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, FCAMX has 27.33% in high quality bonds rated at least 'AA' or higher, while 37.68% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of BBB, and focuses on medium quality securities.
However, it is worth noting that 26 % of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.
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, FCAMX is a load fund. It has an expense ratio of 0.68% compared to the category average of 0.40%. Looking at the fund from a cost perspective, FCAMX is actually more expensive than its peers.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment has no minimum amount.
Bottom Line
Overall, Franklin California High Yield Municipals A ( FCAMX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, this fund looks like a good potential choice for investors right now.
Don't stop here for your research on Muni - Bonds funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare FCAMX to its peers as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.
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Is FCAMX a Strong Bond Fund Right Now?
On the lookout for a Muni - Bonds fund? Starting with Franklin California High Yield Municipals A (FCAMX - Free Report) is one possibility. FCAMX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify FCAMX in the Muni - Bonds category, an area rife with potential choices. Muni - Bonds funds focus their investments on debt securities issued by state and local governments. These are typically used to pay for the construction of infrastructure, the operation of public schools, and other municipal functions. These securities can come in the form of revenue bonds, which are backed by taxes, as well as " general obligation " bonds that are not backed by a defined source. Investors are usually interested that come with most municipal bonds, which can be especially important for those in higher tax brackets.
History of Fund/Manager
Franklin Templeton is based in San Mateo, CA, and is the manager of FCAMX. Franklin California High Yield Municipals A made its debut in May of 1993, and since then, FCAMX has accumulated about $1.40 billion in assets, per the most up-to-date date available. The fund's current manager, John Wiley, has been in charge of the fund since May of 1993.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. FCAMX has a 5-year annualized total return of 4.89% 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 6.11%, 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. The standard deviation of FCAMX over the past three years is 2.98% compared to the category average of -15.58%. The fund's standard deviation over the past 5 years is 4.03% compared to the category average of -3.21%. This makes the fund more volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
For those that believe interest rates will rise, this is an important factor to consider. FCAMX has a modified duration of 6.29, which suggests that the fund will decline 6.29% for every hundred-basis-point increase in interest rates.
Income
Income is often a big reason for purchasing a fixed income security, so it is important to consider the fund's average coupon. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 5.07% means that a $10,000 investment should result in a yearly payout of $507.
For those seeking a strong level of current income, a higher coupon is typically good news. However, it could pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks. FCAMX carries a beta of 0.9, 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 0.61, 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, FCAMX has 27.33% in high quality bonds rated at least 'AA' or higher, while 37.68% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of BBB, and focuses on medium quality securities.
However, it is worth noting that 26 % of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.
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, FCAMX is a load fund. It has an expense ratio of 0.68% compared to the category average of 0.40%. Looking at the fund from a cost perspective, FCAMX is actually more expensive than its peers.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment has no minimum amount.
Bottom Line
Overall, Franklin California High Yield Municipals A ( FCAMX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, this fund looks like a good potential choice for investors right now.
Don't stop here for your research on Muni - Bonds funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare FCAMX to its peers as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.