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There are plenty of choices in the Muni - Bonds category, but where should you start your research? Well, one fund that you should consider investigating is Franklin Federal Tax-Free Inc A1 (FKTIX - Free Report) . FKTIX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes FKTIX 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
Franklin is based in San Mateo, CA, and is the manager of FKTIX. The Franklin Federal Tax-Free Inc A1 made its debut in October of 1983 and FKTIX has managed to accumulate roughly $3.95 billion in assets, as of the most recently available information. The fund's current manager is a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 0.47%, and it sits in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 1.55%, 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. Over the past three years, FKTIX's standard deviation comes in at 8.07%, compared to the category average of 12.65%. The fund's standard deviation over the past 5 years is 7.02% compared to the category average of 12.23%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.
For investors who think interest rates will rise, this is an important factor to consider. FKTIX has a modified duration of 7.97, which suggests that the fund will decline 7.97% for every hundred-basis-point increase in interest rates.
With a beta of 0.8, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, FKTIX has a positive alpha of 0.26, 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, FKTIX has 41.29% in high quality bonds rated at least 'AA' or higher, while 42.51% 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, FKTIX is a load fund. It has an expense ratio of 0.62% compared to the category average of 0.88%. Looking at the fund from a cost perspective, FKTIX is actually cheaper than its peers.
Investors should also note, that according to our data, the fund does not have any minimum investment requirements.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, Franklin Federal Tax-Free Inc A1 ( FKTIX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, better downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.
This could just be the start of your research on FKTIXin the Muni - Bonds category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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Is FKTIX a Strong Bond Fund Right Now?
There are plenty of choices in the Muni - Bonds category, but where should you start your research? Well, one fund that you should consider investigating is Franklin Federal Tax-Free Inc A1 (FKTIX - Free Report) . FKTIX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes FKTIX 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
Franklin is based in San Mateo, CA, and is the manager of FKTIX. The Franklin Federal Tax-Free Inc A1 made its debut in October of 1983 and FKTIX has managed to accumulate roughly $3.95 billion in assets, as of the most recently available information. The fund's current manager is a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 0.47%, and it sits in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 1.55%, 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. Over the past three years, FKTIX's standard deviation comes in at 8.07%, compared to the category average of 12.65%. The fund's standard deviation over the past 5 years is 7.02% compared to the category average of 12.23%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.
For investors who think interest rates will rise, this is an important factor to consider. FKTIX has a modified duration of 7.97, which suggests that the fund will decline 7.97% for every hundred-basis-point increase in interest rates.
With a beta of 0.8, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, FKTIX has a positive alpha of 0.26, 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, FKTIX has 41.29% in high quality bonds rated at least 'AA' or higher, while 42.51% 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, FKTIX is a load fund. It has an expense ratio of 0.62% compared to the category average of 0.88%. Looking at the fund from a cost perspective, FKTIX is actually cheaper than its peers.
Investors should also note, that according to our data, the fund does not have any minimum investment requirements.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, Franklin Federal Tax-Free Inc A1 ( FKTIX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, better downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.
This could just be the start of your research on FKTIXin the Muni - Bonds category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.