Is HICOX a Strong Bond Fund Right Now?

If you have been looking for Muni - Bonds funds, a place to start could be Colorado Bond Shares Tax-Exempt A (HICOX). HICOX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

HICOX 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

HICOX finds itself in the Freedom Funds family, based out of Denver, CO. Colorado Bond Shares Tax-Exempt A debuted in June of 1987. Since then, HICOX has accumulated assets of about $1.90 billion, according to the most recently available information. The fund's current manager, Fred R. Kelly Jr., has been in charge of the fund since November of 1990.

Performance

Of course, investors look for strong performance in funds. HICOX has a 5-year annualized total return of 3.51%, and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 6.77%, 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. Over the past three years, HICOX's standard deviation comes in at 4.34%, compared to the category average of 5.25%. The standard deviation of the fund over the past 5 years is 4.75% compared to the category average of 5.41%. This makes the fund less volatile than its peers over the past half-decade.

However, it is worth noting that 85% of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, HICOX is a load fund and it has an expense ratio of 0.59%.

Investors need to be aware that with this product, the minimum initial investment is $500; each subsequent investment has no minimum amount.

Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.

Bottom Line

This puts this fund from Freedom Funds in the top 20% of all mutual funds we have a rank on right now. As a result, this is likely an excellent choice for investors seeking an option in the Muni - Bonds category.

For additional information on this product, or to compare it to other mutual funds in the Muni - Bonds, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.

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This article originally published on Zacks Investment Research (zacks.com).

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