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Having trouble finding a Muni - Bonds fund? Franklin California High Yield Municipals A (FCAMX - Free Report) is a potential starting point. FCAMX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes FCAMX 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 Templeton is responsible for FCAMX, and the company is based out of San Mateo, CA. Franklin California High Yield Municipals A made its debut in May of 1993, and since then, FCAMX has accumulated about $1.37 billion in assets, per the most up-to-date date available. John Wiley is the fund's current manager and has held that role since May of 1993.
Performance
Of course, investors look for strong performance in funds. FCAMX has a 5-year annualized total return of 5.2% 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 3.69%, 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. FCAMX's standard deviation over the past three years is 4.64% compared to the category average of 6.94%. Over the past 5 years, the standard deviation of the fund is 4.02% compared to the category average of 7.11%. 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. FCAMX has a modified duration of 6.53, which suggests that the fund will decline 6.53% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 5.24% means that a $10,000 investment should result in a yearly payout of $524.
While a higher coupon is good for when you want a strong level of current income, it could present 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. This fund has a beta of 1.32, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, FCAMX has a positive alpha of 0.79, 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 29.5% in high quality bonds rated at least 'AA' or higher, while 37.84% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.
However, it is worth noting that 24 % 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, FCAMX is a load fund. It has an expense ratio of 0.67% compared to the category average of 0.85%. So, FCAMX is actually cheaper than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment has no minimum amount.
Bottom Line
Overall, Franklin California High Yield Municipals A ( FCAMX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
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?
Having trouble finding a Muni - Bonds fund? Franklin California High Yield Municipals A (FCAMX - Free Report) is a potential starting point. FCAMX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes FCAMX 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 Templeton is responsible for FCAMX, and the company is based out of San Mateo, CA. Franklin California High Yield Municipals A made its debut in May of 1993, and since then, FCAMX has accumulated about $1.37 billion in assets, per the most up-to-date date available. John Wiley is the fund's current manager and has held that role since May of 1993.
Performance
Of course, investors look for strong performance in funds. FCAMX has a 5-year annualized total return of 5.2% 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 3.69%, 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. FCAMX's standard deviation over the past three years is 4.64% compared to the category average of 6.94%. Over the past 5 years, the standard deviation of the fund is 4.02% compared to the category average of 7.11%. 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. FCAMX has a modified duration of 6.53, which suggests that the fund will decline 6.53% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 5.24% means that a $10,000 investment should result in a yearly payout of $524.
While a higher coupon is good for when you want a strong level of current income, it could present 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. This fund has a beta of 1.32, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, FCAMX has a positive alpha of 0.79, 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 29.5% in high quality bonds rated at least 'AA' or higher, while 37.84% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.
However, it is worth noting that 24 % 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, FCAMX is a load fund. It has an expense ratio of 0.67% compared to the category average of 0.85%. So, FCAMX is actually cheaper than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment has no minimum amount.
Bottom Line
Overall, Franklin California High Yield Municipals A ( FCAMX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
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.