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Is HICOX a Strong Bond Fund Right Now?

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If you have been looking for Muni - Bonds funds, a place to start could be Colorado Bond Shares Tax-Exempt A (HICOX - Free Report) . HICOX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify HICOX 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

Freedom Funds is based in Denver, CO, and is the manager of HICOX. Colorado Bond Shares Tax-Exempt A debuted in June of 1987. Since then, HICOX has accumulated assets of about $1.33 billion, according to the most recently available information. The fund is currently managed by Fred R. Kelly who has been in charge of the fund since November of 1990.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 4.6%, 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 5.47%, 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. Over the past three years, HICOX's standard deviation comes in at 1.27%, compared to the category average of 2.2%. The fund's standard deviation over the past 5 years is 1.43% compared to the category average of 2.79%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.23, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, HICOX has a positive alpha of 2.74, which measures performance on a risk-adjusted basis.

However, it is worth noting that 94 % of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.

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, HICOX is a load fund. It has an expense ratio of 0.55% compared to the category average of 0.83%. From a cost perspective, HICOX is actually cheaper than its peers.

While the minimum initial investment for the product is $500, investors should also note that there is no minimum for each subsequent investment.

Bottom Line

Overall, Colorado Bond Shares Tax-Exempt A ( HICOX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Colorado Bond Shares Tax-Exempt A ( HICOX ) looks like a good 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. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.


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