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Any investors hoping to find a Mutual Fund Bond fund might consider looking past T. Rowe Price Tax Free Income Adviser (PATAX - Free Report) . PATAX holds a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of PATAX. T. Rowe Price Tax Free Income Adviser made its debut in October of 1976, and since then, PATAX has accumulated about $55 million in assets, per the most up-to-date date available. The fund's current manager, Konstantine B. Mallas, has been in charge of the fund since July of 2007.
Performance
Of course, investors look for strong performance in funds. PATAX has a 5-year annualized total return of 1.31% and is in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 0.89%, 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, PATAX's standard deviation comes in at 6.64%, compared to the category average of 12.74%. The fund's standard deviation over the past 5 years is 5.95% compared to the category average of 12.35%. This makes the fund less volatile than its peers over the past half-decade.
This fund has a beta of 0.92, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, PATAX has a negative alpha of -0.76, 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, PATAX has 44.38% in high quality bonds rated at least 'AA' or higher, while 43.42% 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
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, PATAX is a no load fund. It has an expense ratio of 0.87% compared to the category average of 0.78%. Looking at the fund from a cost perspective, PATAX is actually more expensive than its peers.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment needs to be at least $100.
Bottom Line
Overall, T. Rowe Price Tax Free Income Adviser ( PATAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and higher fees, this fund looks like a poor potential choice for investors right now.
Your research on the Mutual Fund Bond 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. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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Is PATAX a Strong Bond Fund Right Now?
Any investors hoping to find a Mutual Fund Bond fund might consider looking past T. Rowe Price Tax Free Income Adviser (PATAX - Free Report) . PATAX holds a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of PATAX. T. Rowe Price Tax Free Income Adviser made its debut in October of 1976, and since then, PATAX has accumulated about $55 million in assets, per the most up-to-date date available. The fund's current manager, Konstantine B. Mallas, has been in charge of the fund since July of 2007.
Performance
Of course, investors look for strong performance in funds. PATAX has a 5-year annualized total return of 1.31% and is in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 0.89%, 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, PATAX's standard deviation comes in at 6.64%, compared to the category average of 12.74%. The fund's standard deviation over the past 5 years is 5.95% compared to the category average of 12.35%. This makes the fund less volatile than its peers over the past half-decade.
This fund has a beta of 0.92, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, PATAX has a negative alpha of -0.76, 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, PATAX has 44.38% in high quality bonds rated at least 'AA' or higher, while 43.42% 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
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, PATAX is a no load fund. It has an expense ratio of 0.87% compared to the category average of 0.78%. Looking at the fund from a cost perspective, PATAX is actually more expensive than its peers.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment needs to be at least $100.
Bottom Line
Overall, T. Rowe Price Tax Free Income Adviser ( PATAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and higher fees, this fund looks like a poor potential choice for investors right now.
Your research on the Mutual Fund Bond 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. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.