3 / 5 Stars
4 4 3 3 5
Zacks Investment Research
5 (Strong Sell)
Standard & Poor's
3 / 5 Stars
#35 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 4.23 percent over the past year, 4.84 percent over the past three years, 5.12 percent over the past five years, and 4.09 percent over the past decade.
|Trailing Returns||Updated 06.30.2014|
|Year to date||4.9%|
|3 Years (Annualized)||4.8%|
|5 Years (Annualized)||5.1%|
|10 Years (Annualized)||4.1%|
For Legg Mason WA Intermediate-Term Muni's investors, the past several years have been a rocky road.
As of July 03, 2014, the fund has assets totaling almost $2.34 billion invested in 333 different holdings. Its portfolio consists of municipal bonds (debt issued by state and local governments, as well as their agencies).
Compared with its peers, this fund digs down deeper into the credit spectrum. Since 2009, that's worked out quite well. Last year, for instance, the fund rocketed to a 14 percent return. But the fund's added risk magnified its losses in 2008, when the recession stung muni bonds, particularly those with lower ratings. Notably, the fund lost 5 percent that year. Says Morningstar: "When bond prices started falling, the managers seized the opportunity to add some lower-quality bonds but those issues continued suffering as the market went from bad to worse. The fund also lost money on its short futures hedges as treasuries rallied strongly." Betting against the treasuries market isn't an unusual move for this fund, which employs a rather diverse strategy. Unlike its peers, which tend to load up on AAA bonds, this fund prefers A-rated fare. It also supplements those holdings with a fair amount of BBB (the lowest rating still considered to be investment grade) 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. The fund has returned 4.23 percent over the past year and 4.84 percent over the past three years.
Historically, the fund has had its fair share of ups and downs. Despite finishing in the top 10 percent of Morningstar's intermediate-term national municipal bond category in three separate years since 2000, its long-term numbers are relatively mediocre. As of the end of October, its trailing 10-year returns landed it in the bottom half of its Morningstar group. Meanwhile, its trailing 15-year returns put it in the bottom third. The fund has returned 5.12 percent over the past five years and 4.09 percent over the past decade.
According to the fund's prospectus: "Under normal circumstances, the fund invests at least 80% of its assets in 'municipal securities.' ... Instead of investing directly in particular securities, the fund may use instruments such as derivatives, including futures contracts, and synthetic instruments that are intended to provide economic exposure to the securities or the issuer."
Role in Portfolio
Morningstar calls this fund a "supporting player."
A team of five managers runs the fund.
Legg Mason WA Intermediate-Term Muni has an expense ratio of 0.75 percent.
Going forward, one of the bigger risks is rising interest rates. When interest rates go up, bond prices will fall.