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Having trouble finding a Muni - Bonds fund? Vanguard Intermediate-Term Tax-Exempt Investor (VWITX) is a potential starting point. VWITX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
VWITX 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
Vanguard Group is based in Malvern, PA, and is the manager of VWITX. Vanguard Intermediate-Term Tax-Exempt Investor made its debut in September of 1977, and since then, VWITX has accumulated about $2.26 billion in assets, per the most up-to-date date available. The fund's current manager, James D'Arcy, has been in charge of the fund since June of 2013.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. VWITX has a 5-year annualized total return of 1.28% and is in the top 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 0.16%, 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. VWITX's standard deviation over the past three years is 6.24% compared to the category average of 10.29%. Looking at the past 5 years, the fund's standard deviation is 5.5% compared to the category average of 10.51%. This makes the fund less volatile than its peers over the past half-decade.
VWITX carries a beta of 0.68, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 0.02, 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, VWITX has 59.52% in high quality bonds rated at least 'AA' or higher, while 35.87% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of AA, and focuses on high quality securities.