4 / 5 Stars
4 4 4 5 4
Zacks Investment Research
Standard & Poor's
4 / 5 Stars
#13 in Muni National Interm
U.S. News evaluated 83 Muni National Interm Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
The fund has returned 4.69 percent over the past year, 5.67 percent over the past three years, 5.92 percent over the past five years, and 4.30 percent over the past decade.
|Trailing Returns||Updated 04.30.2013|
|Year to date||1.5%|
|3 Years (Annualized)||5.7%|
|5 Years (Annualized)||5.9%|
|10 Years (Annualized)||4.3%|
Invesco Tax-Free Intermediate has been getting the job done.
As of May 03, 2013, the fund has assets totaling almost $1.56 billion invested in 849 different holdings. Its portfolio consists of municipal bonds (debt issued by state and local governments, as well as their agencies).
This municipal bond fund performed well during the turbulence of the credit crisis. In 2008, when the municipal bond market foundered, this fund managed to deliver a solidly positive return. That feat is a testament to management's steady approach, which emphasizes bonds at the higher end of the credit spectrum. Last year, an injection of federal stimulus dollars into state and local governments helped restore confidence in the muni market, and this fund was among the beneficiaries. Lately, the fund has continued to focus on bonds whose issuers have steady cash flows. That has led to a preference for water, sewer, and utilities bonds. Going forward, one of the bigger risks for the fund is rising interest rates. Rates, which are at historic lows, can only go up, and when that happens, bond prices will go down. In anticipation of this shift, management has been keeping a lid on the fund's average duration, thereby limiting its interest rate risk. The fund has returned 4.69 percent over the past year and 5.67 percent over the past three years.
Historically, the fund has done a fine job of achieving its goal: providing investors with steady income and tax advantages (muni investors traditionally do not need to pay federal income taxes on their interest.) In the process, it's had its fair share of highs and lows. Since 2000, the fund has landed in the bottom third of Morningstar's national intermediate-term municipal bond category in four separate years. But it has also had a number of very strong years, and as a result, as of the end of the first quarter, its 10-year trailing returns landed it in the top 30 percent of its Morningstar category. The fund has returned 5.92 percent over the past five years and 4.30 percent over the past decade.
Management likes high-quality bonds whose issuers have steady cash flows. "What we're trying to do is complement riskier investments that other people have," says co-manager Richard Berry. "Over time, quality does seem to help us quite a bit." In addition to focusing on quality, management has also kept the fund's average duration below the average for its peer group. Although that can lead to some lost opportunities while interest rates are low, it limits the potential for pain in a rising-rate environment.
Role in Portfolio
This fund could lend support to a well-balanced portfolio.
Richard Berry and Stephen Turman manage the fund.
Invesco Tax-Free Intermediate Fund has an expense ratio of 0.35 percent.
Going forward, one of the bigger risks is rising interest rates. When interest rates go up, bond prices will fall.