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There are plenty of choices in the Muni - Bonds category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard High-Yield Tax-Exempt Investor (VWAHX). VWAHX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
VWAHX 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
VWAHX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Vanguard High-Yield Tax-Exempt Investor debuted in December of 1978. Since then, VWAHX has accumulated assets of about $1.83 billion, according to the most recently available information. The fund is currently managed by Mathew Kiselak who has been in charge of the fund since July of 2010.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 1.57%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of -0.41%, 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. The standard deviation of VWAHX over the past three years is 9.07% compared to the category average of 11.5%. Looking at the past 5 years, the fund's standard deviation is 8.22% compared to the category average of 11.58%. This makes the fund less volatile than its peers over the past half-decade.
This fund has a beta of 0.88, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VWAHX has a positive alpha of 1.01, which measures performance on a risk-adjusted basis.