Is NMTRX a Strong Bond Fund Right Now?
If you've been stuck searching for Muni - Bonds funds, you might want to consider passing on by Nuveen Municipals Total Return Managed Accounts Portfolio (NMTRX) as a possibility. NMTRX possesses a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
NMTRX 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
Nuveen is based in Chicago, IL, and is the manager of NMTRX. The Nuveen Municipals Total Return Managed Accounts Portfolio made its debut in January of 2008 and NMTRX has managed to accumulate roughly $1.57 billion in assets, as of the most recently available information. The fund's current manager, Martin J. Doyle, has been in charge of the fund since January of 2008.
Performance
Investors naturally seek funds with strong performance. NMTRX has a 5-year annualized total return of 0.61%, and it sits in the bottom 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 4.46%, which places it in the bottom 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. NMTRX's standard deviation over the past three years is 5.21% compared to the category average of 5.41%. Over the past 5 years, the standard deviation of the fund is 6.18% compared to the category average of 7.03%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
For those that believe interest rates will rise, this is an important factor to consider. NMTRX has a modified duration of 10.07, which suggests that the fund will decline 10.07% for every hundred-basis-point increase in interest rates.
This fund has a beta of 0.65, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, NMTRX has a negative alpha of -0.4, which measures performance on a risk-adjusted basis.Ratings
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, NMTRX has 40.1% in high quality bonds rated at least "AA" or higher, while 39.9% are of medium quality, with ratings of "A" to "BBB". The fund has an average quality of A, and focuses on high quality securities.Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, NMTRX is a no load fund. It has an expense ratio of 0.07% compared to the category average of 0.51%. From a cost perspective, NMTRX is actually cheaper than its peers.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, even with its comparatively weak performance, average downside risk, and lower fees, Nuveen Municipals Total Return Managed Accounts Portfolio ( NMTRX ) has a low Zacks Mutual Fund rank, and therefore looks a somewhat weak choice for investors right now.
This could just be the start of your research on NMTRX in 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. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
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This article originally published on Zacks Investment Research (zacks.com).
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