Is TAIFX a strong bond fund right now?

If you have been looking for Muni - Bonds funds, a place to start could be American Funds Tax-Aware Conservative Growth and Income F-1 (TAIFX). TAIFX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

We classify TAIFX 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

American Funds is responsible for TAIFX, and the company is based out of Los Angeles, CA. The American Funds Tax-Aware Conservative Growth and Income F-1 made its debut in May of 2012 and TAIFX has managed to accumulate roughly $287.00 million in assets, as of the most recently available information. A team of investment professionals is the fund's current manager.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. TAIFX has a 5-year annualized total return of 8.62%, and is in the top 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 12.86%, 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. Over the past three years, TAIFX's standard deviation comes in at 8.18%, compared to the category average of 11.12%. Over the past 5 years, the standard deviation of the fund is 9.16% 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, TAIFX is a no load fund. It has an expense ratio of 0.38% compared to the category average of 0.91%. From a cost perspective, TAIFX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $250; each subsequent investment needs to be at least $50.

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

Bottom line

Overall, American Funds Tax-Aware Conservative Growth and Income F-1 ( TAIFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, American Funds Tax-Aware Conservative Growth and Income F-1 ( TAIFX ) looks like a good potential choice for investors right now.