Yahoo Finance Is FKTIX a Strong Bond Fund Right Now?
If you've been stuck searching for Muni - Bonds funds, you might want to consider passing on by Franklin Federal Tax-Free Inc A1 (FKTIX) as a possibility. FKTIX possesses a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
We classify FKTIX in the Muni - Bonds category, an area rife with potential choices. Muni - Bonds funds focus their investments on debt securities issued by state and local governments. These are typically used to pay for the construction of infrastructure, the operation of public schools, and other municipal functions. These securities can come in the form of revenue bonds, which are backed by taxes, as well as " general obligation " bonds that are not backed by a defined source. Investors are usually interested that come with most municipal bonds, which can be especially important for those in higher tax brackets.
History of Fund/Manager
FKTIX finds itself in the Franklin family, based out of San Mateo, CA. The Franklin Federal Tax-Free Inc A1 made its debut in October of 1983 and FKTIX has managed to accumulate roughly $4.61 billion in assets, as of the most recently available information. A team of investment professionals is the fund's current manager.
Performance
Investors naturally seek funds with strong performance. FKTIX has a 5-year annualized total return of 0.81% and it sits in the middle 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 -1.66%, 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 FKTIX over the past three years is 8.37% compared to the category average of 13.08%. Looking at the past 5 years, the fund's standard deviation is 7.28% compared to the category average of 13.72%. This makes the fund less volatile than its peers over the past half-decade.
FKTIX carries a beta of 0.92, 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 0.08, 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 38.8% in high quality bonds rated at least 'AA' or higher, while 45.1% 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
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, FKTIX is a load fund. It has an expense ratio of 0.63% compared to the category average of 0.89%. 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, even with its comparatively similar performance, better downside risk, and lower fees, Franklin Federal Tax-Free Inc A1 ( FKTIX ) has a low Zacks Mutual Fund rank, and therefore looks a somewhat weak choice for investors right now.
Want even more information about FKTIX? 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. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
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