Is NUVBX a Strong Bond Fund Right Now?
If you have been looking for Muni - Bonds funds, a place to start could be Nuveen Intermediate Duration Municipals I (NUVBX). NUVBX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
NUVBX 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
NUVBX is a part of the Nuveen family of funds, a company based out of Chicago, IL. Nuveen Intermediate Duration Municipals I made its debut in November of 1976, and since then, NUVBX has accumulated about $8.07 billion in assets, per the most up-to-date date available. The fund's current manager, Paul L. Brennan, has been in charge of the fund since December of 2007.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 1.1%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 3.63%, which places it in the middle 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 NUVBX over the past three years is 4.83% compared to the category average of 8.81%. The fund's standard deviation over the past 5 years is 5.36% compared to the category average of 10.24%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
For those that believe interest rates will rise, this is an important factor to consider. NUVBX has a modified duration of 5.37, which suggests that the fund will decline 5.37% for every hundred-basis-point increase in interest rates.
NUVBX carries a beta of 0.57, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a negative alpha of -0.32, 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, NUVBX has 56.5% in high quality bonds rated at least "AA" or higher, while 32.5% 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
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, NUVBX is a no load fund. It has an expense ratio of 0.44% compared to the category average of 0.81%. Looking at the fund from a cost perspective, NUVBX is actually cheaper than its peers.
This fund requires a minimum initial investment of $100,000, while 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, Nuveen Intermediate Duration Municipals I ( NUVBX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
This could just be the start of your research on NUVBX 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. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.
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This article originally published on Zacks Investment Research (zacks.com).
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