Back to top

Image: Bigstock

Is ACTHX a Strong Bond Fund Right Now?

Read MoreHide Full Article

On the lookout for a Muni - Bonds fund? Starting with Invesco High Yield Municipals A (ACTHX - Free Report) is one possibility. ACTHX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes ACTHX as Muni - Bonds, which is a segment packed with options. Muni - Bonds funds invest in debt securities issued by states or local municipalities. These are generally used to finance construction of infrastructure, pay for schools, or other government functions. Some are backed by taxes (revenue bonds), while others are " general obligation " and may not be backed by a defined source. Investors usually appreciate the tax benefits that come with many municipal bonds, which are especially impressive for those in high tax brackets.

History of Fund/Manager

Invesco is based in Kansas City, MO, and is the manager of ACTHX. The Invesco High Yield Municipals A made its debut in January of 1986 and ACTHX has managed to accumulate roughly $6.79 billion in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. ACTHX has a 5-year annualized total return of 4.46% and it sits 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 5.97%, 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. Over the past three years, ACTHX's standard deviation comes in at 7.86%, compared to the category average of 13.42%. The fund's standard deviation over the past 5 years is 6.68% compared to the category average of 11.15%. This makes the fund less volatile than its peers over the past half-decade.

ACTHX carries a beta of 0.78, 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 0.15, which measures performance on a risk-adjusted basis.

Ratings

However, it is worth noting that 40 % of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, ACTHX is a load fund. It has an expense ratio of 1.03% compared to the category average of 0.80%. Looking at the fund from a cost perspective, ACTHX is actually more expensive than its peers.

This fund requires a minimum initial investment of $1,000, and each subsequent investment should be at least $50.

Bottom Line

Overall, Invesco High Yield Municipals A ( ACTHX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and higher fees, Invesco High Yield Municipals A ( ACTHX ) 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 Muni - Bonds, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Invesco High Yield Muni A (ACTHX) - free report >>

Published in