Back to top

Image: Bigstock

Is TAIAX a Strong Bond Fund Right Now?

Read MoreHide Full Article

There are plenty of choices in the Muni - Bonds category, but where should you start your research? Well, one fund that might be worth investigating is American Funds Tax-Advantaged Income A (TAIAX - Free Report) . TAIAX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

TAIAX is one of many Muni - Bonds funds to choose from. Muni - Bonds funds invest in debt securities issued by states and local municipalities, which are typically used to pay for infrastructure construction, schools, and other government functions. These securities can be backed by taxes (revenue bonds), but others are known as " general obligation " and are not necessarily backed by a defined source. These bonds are especially attractive because of their inherent tax benefits.

History of Fund/Manager

American Funds is based in Los Angeles, CA, and is the manager of TAIAX. The American Funds Tax-Advantaged Income A made its debut in May of 2012 and TAIAX has managed to accumulate roughly $3.13 billion in assets, as of the most recently available information. The fund is currently managed by 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 5.84%, and it sits in the top 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 2.92%, which places it in the top 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 TAIAX over the past three years is 10.44% compared to the category average of 13.35%. Over the past 5 years, the standard deviation of the fund is 10.25% compared to the category average of 14.18%. This makes the fund less volatile than its peers over the past half-decade.

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, TAIAX is a load fund. It has an expense ratio of 0.34% compared to the category average of 0.90%. TAIAX is actually cheaper than its peers when you consider factors like cost.

Investors should also note that the minimum initial investment for the product is $250 and that each subsequent investment needs to be at $50

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, American Funds Tax-Advantaged Income A ( TAIAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, American Funds Tax-Advantaged Income A ( TAIAX ) looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Muni - Bonds, make sure to go to www.zacks.com/funds/mutual-funds 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.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


American Fds TaxAware CnsvGr&Inc A (TAIAX) - free report >>

Published in