If you've been stuck searching for Muni - Bonds funds, consider Oppenheimer Rochester High Yield Municipals A (ORNAX) as a possibility. ORNAX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
ORNAX 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
Invesco is based in Kansas City, MO, and is the manager of ORNAX. Oppenheimer Rochester High Yield Municipals A made its debut in October of 1993, and since then, ORNAX has accumulated about $3.31 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 5.63%, 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 3.98%, 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. ORNAX's standard deviation over the past three years is 7.98% compared to the category average of 10.42%. The fund's standard deviation over the past 5 years is 7.13% compared to the category average of 9.51%. This makes the fund less volatile than its peers over the past half-decade.
ORNAX carries a beta of 1, meaning that the fund is volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 1.46, which measures performance on a risk-adjusted basis.
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, ORNAX has 20.19% in medium quality bonds, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 21.5%, giving ORNAX an average quality of BBB. This means that it focuses on medium quality securities.
However, it is worth noting that 40 % of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, ORNAX is a load fund. It has an expense ratio of 0.95% compared to the category average of 0.82%. ORNAX is actually more expensive than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $50.
Overall, Oppenheimer Rochester High Yield Municipals A ( ORNAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and higher fees, Oppenheimer Rochester High Yield Municipals A ( ORNAX ) looks like a good potential choice for investors right now.
This could just be the start of your research on ORNAXin the Muni - Bonds category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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