Muni - Bonds fund seekers should consider taking a look at BlackRock (NYSE:BLK) Strategic Municipals Opportunities A (MEMTX). MEMTX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes MEMTX as Muni - Bonds, which is a segment packed with options. Muni - Bonds funds invest in debt securities issued by states or local municipalities. These are generally used to finance construction of infrastructure, pay for schools, or other government functions. Some are backed by taxes (revenue bonds), while others are " general obligation " and may not be backed by a defined source. Investors usually appreciate the tax benefits that come with many municipal bonds, which are especially impressive for those in high tax brackets.
History of Fund/Manager
BlackRock is based in New York, NY, and is the manager of MEMTX. Since BlackRock Strategic Municipals Opportunities A made its debut in October of 2006, MEMTX has garnered more than $1.77 billion in assets. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. MEMTX has a 5-year annualized total return of 2.73% and is in the middle 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 1.72%, which places it in the bottom 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. Compared to the category average of 12.03%, the standard deviation of MEMTX over the past three years is 6.56%. Over the past 5 years, the standard deviation of the fund is 5.67% compared to the category average of 10.53%. This makes the fund less volatile than its peers over the past half-decade.
This fund has a beta of 0.47, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, MEMTX has a negative alpha of -1.52, which measures performance on a risk-adjusted basis.
Expenses
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, MEMTX is a load fund. It has an expense ratio of 0.76% compared to the category average of 0.83%. From a cost perspective, MEMTX is actually cheaper than its peers.
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.
Bottom Line
Overall, BlackRock Strategic Municipals Opportunities A ( MEMTX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund 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. 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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