Discovering the Potential of USAA Tax-Exempt Intermediate-Term (USATX)
Uncover the Hidden Gems in Muni – Bonds with USATX
Muni – Bonds and Their Significance
Muni – Bonds funds play a crucial role in the investment landscape by investing in debt securities issued by states and local municipalities. These funds are often used to fund essential infrastructure projects, educational institutions, and other government initiatives. The tax benefits associated with these bonds make them particularly attractive to investors. Some bonds are backed by taxes (revenue bonds), while others are known as "general obligation" bonds and may not have a specific source of repayment. This diversity offers investors a range of options to suit their risk appetites and investment goals.For instance, consider a state that is planning to build a new highway. To finance this project, the state may issue Muni – Bonds. Investors who purchase these bonds become creditors of the state and receive regular interest payments until the bonds mature. The tax advantages of Muni – Bonds can be significant, as the interest income is often exempt from federal taxes and in some cases, state and local taxes as well. This can lead to higher after-tax returns for investors, making Muni – Bonds an attractive addition to a diversified investment portfolio.
USATX - A Manager with a Proven Track Record
Victory, based in Columbus, OH, manages USATX. Since its debut in March 1982, USATX has amassed over $2.51 billion in assets. Andrew Hattman currently serves as the fund's manager, having taken on this role since July 2019. Under his leadership, the fund has shown consistent performance and has become a trusted choice among investors.The fund's long history and the experience of its management team give investors confidence in its ability to navigate different market conditions. Andrew Hattman's expertise in the Muni – Bonds space allows him to make informed investment decisions and manage the fund's portfolio effectively. His track record of success adds to the appeal of USATX and makes it a fund worth considering for those looking to invest in Muni – Bonds.
Performance Metrics and Risk Analysis
Investors are naturally concerned about the performance of the funds they invest in. USATX has a 5-year annualized total return of 1.26%, placing it in the top third among its category peers. This indicates that the fund has delivered relatively strong returns over the long term. However, for those with a shorter time horizon, the 3-year annualized total return of -0.03% is also worth considering. While it may not be as impressive as the 5-year return, it still shows that the fund has been able to generate positive returns over a three-year period.When evaluating a fund's performance, it is essential to look at the standard deviation of the returns. A lower standard deviation indicates less volatility, which means the fund experiences fewer ups and downs in value. USATX has a standard deviation of 6.15% over the past three years, compared to the category average of 11.62%. This makes the fund less volatile than its peers, providing investors with a more stable investment option. Over the past 5 years, the fund's standard deviation is 5.75%, further highlighting its ability to manage risk and deliver consistent returns.
Cost Considerations and Competitive Advantage
Cost is a crucial factor in mutual fund investing, and USATX stands out in this regard. As a no load fund, it has an expense ratio of 0.49%, which is significantly lower than the category average of 0.84%. This means that investors can keep more of their investment returns and benefit from lower fees. In a competitive market, a lower cost product has the potential to outperform its otherwise identical counterpart. By choosing USATX, investors can enjoy the benefits of Muni – Bonds investing with lower costs, enhancing their overall investment returns.It is important to note that while costs are an important consideration, they are not the only factor to evaluate. Other factors such as performance, risk, and management expertise also play a significant role in determining the suitability of a fund. However, when comparing different Muni – Bonds funds, a lower cost structure can provide a competitive advantage and improve the fund's long-term performance.
Investment Requirements and Considerations
USATX has a minimum initial investment of $3,000, with subsequent investments of at least $50. This makes it accessible to a wide range of investors, allowing them to start investing in Muni – Bonds with a relatively small amount. However, it is important to consider that fees charged by investment advisors have not been taken into account. If these fees were included, the returns would be lower. Therefore, investors should carefully consider their investment goals, risk tolerance, and overall financial situation before investing in USATX or any other mutual fund.Overall, USAA Tax-Exempt Intermediate-Term (USATX) offers a compelling combination of a high Zacks Mutual Fund rank, strong performance, better downside risk, and lower fees. It is a fund that deserves careful consideration for investors looking to add Muni – Bonds to their portfolio. With its proven track record and competitive advantages, USATX has the potential to provide investors with stable returns and help them achieve their long-term financial goals.
For additional information on the Muni – Bonds area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into USATX too for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportGet Your Free (USATX): Fund Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research