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Is MEMTX a Strong Bond Fund Right Now?

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Muni - Bonds fund seekers should consider taking a look at BlackRock Strategic Municipals Opportunities A (MEMTX - Free Report) . MEMTX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes MEMTX 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

BlackRock is responsible for MEMTX, and the company is based out of New York, NY. BlackRock Strategic Municipals Opportunities A made its debut in October of 2006, and since then, MEMTX has accumulated about $733.80 million in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 0.05%, and it sits in the bottom 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 -1.93%, which places it in the bottom third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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 MEMTX over the past three years is 7.59% compared to the category average of 13.08%. Looking at the past 5 years, the fund's standard deviation is 7.88% compared to the category average of 13.72%. This makes the fund less volatile than its peers over the past half-decade.

MEMTX carries a beta of 0.81, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a negative alpha of -1, 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, MEMTX has 57.48% in high quality bonds rated at least 'AA' or higher, while 22.42% 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

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, MEMTX is a load fund. It has an expense ratio of 0.86% compared to the category average of 0.89%. Looking at the fund from a cost perspective, MEMTX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $50.

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, BlackRock Strategic Municipals Opportunities A ( MEMTX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, better downside risk, and lower fees, BlackRock Strategic Municipals Opportunities A ( MEMTX ) looks like a great potential choice for investors right now.

Your research on the Muni - Bonds segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer 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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