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Is TAIAX a strong bond fund right now?

Any investors hoping to find a Muni - Bonds fund could think about starting with American Funds Tax-Advantaged Income A (TAIAX - Free Report) . TAIAX bears a Zacks Mutual Fund Rank of 2 (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 $3.89 billion in assets, as of the most recently available information. A team of investment professionals is the fund's current manager.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 8.68%, 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 12.92%, 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. Compared to the category average of 11.12%, the standard deviation of TAIAX over the past three years is 8.19%. Over the past 5 years, the standard deviation of the fund is 9.17% compared to the category average of 12.38%. 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 0.91%. 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 consideration. Returns would be less if those were included.


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Zacks Investment Research

Zacks Investment Research provides unbiased investment research and tools to help individuals and institutional investors make confident investing decisions. 

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