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Is USATX a Strong Bond Fund Right Now?

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If you've been stuck searching for Muni - Bonds funds, consider Victory Tax-Exempt IT (USATX - Free Report) as a possibility. USATX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

USATX is one of many Muni - Bonds funds to choose from. Muni - Bonds funds invest in debt securities issued by states and local municipalities, which are typically used to pay for infrastructure construction, schools, and other government functions. These securities can be backed by taxes (revenue bonds), but others are known as " general obligation " and are not necessarily backed by a defined source. These bonds are especially attractive because of their inherent tax benefits.

History of Fund/Manager

Victory is responsible for USATX, and the company is based out of Columbus, OH. Victory Tax-Exempt IT made its debut in March of 1982, and since then, USATX has accumulated about $2.37 billion in assets, per the most up-to-date date available. The fund is currently managed by Andrew Hattman who has been in charge of the fund since July of 2019.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 1.81%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 2.38%, which places it in the middle 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 USATX over the past three years is 5.84% compared to the category average of 11.53%. Over the past 5 years, the standard deviation of the fund is 5.4% compared to the category average of 12.01%. This makes the fund less volatile than its peers over the past half-decade.

With a beta of 0.57, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, USATX has a positive alpha of 0.41, 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 69.45% in medium quality bonds, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 4.98%, giving USATX an average quality of A. This means that it focuses on high quality securities.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, USATX is a no load fund. It has an expense ratio of 0.48% compared to the category average of 0.83%. USATX is actually cheaper than its peers when you consider factors like cost.

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.

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

Bottom Line

Overall, Victory Tax-Exempt IT ( USATX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

Want even more information about USATX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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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