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Having trouble finding a Muni - Bonds fund? Well, T. Rowe Price Tax Free High Yield Retail (PRFHX - Free Report) would not be a good potential starting point right now. PRFHX possesses a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes PRFHX as Muni - Bonds, which is a segment packed with options. Muni - Bonds funds invest in debt securities issued by states or local municipalities. These are generally used to finance construction of infrastructure, pay for schools, or other government functions. Some are backed by taxes (revenue bonds), while others are " general obligation " and may not be backed by a defined source. Investors usually appreciate the tax benefits that come with many municipal bonds, which are especially impressive for those in high tax brackets.
History of Fund/Manager
PRFHX finds itself in the T. Rowe Price family, based out of Baltimore, MD. T. Rowe Price Tax Free High Yield Retail made its debut in March of 1985, and since then, PRFHX has accumulated about $3.73 billion in assets, per the most up-to-date date available. James M. Murphy is the fund's current manager and has held that role since January of 2001.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 4.14%, and is 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 4.77%, which places it in the middle third during this time-frame.
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, PRFHX's standard deviation comes in at 7.08%, compared to the category average of 12.32%. The standard deviation of the fund over the past 5 years is 6.03% compared to the category average of 10.42%. This makes the fund less volatile than its peers over the past half-decade.
This fund has a beta of 0.8, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, PRFHX has a negative 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, PRFHX has 47.51% in medium quality bonds, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 22.74%, giving PRFHX an average quality of BBB. This means that it focuses on medium quality securities.
However, it is worth noting that 28 % 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, PRFHX is a no load fund. It has an expense ratio of 0.63% compared to the category average of 0.80%. PRFHX is actually cheaper than its peers when you consider factors like cost.
This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $100.
Bottom Line
Overall, T. Rowe Price Tax Free High Yield Retail ( PRFHX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
Your research on the Muni - Bonds segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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Is PRFHX a Strong Bond Fund Right Now?
Having trouble finding a Muni - Bonds fund? Well, T. Rowe Price Tax Free High Yield Retail (PRFHX - Free Report) would not be a good potential starting point right now. PRFHX possesses a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes PRFHX as Muni - Bonds, which is a segment packed with options. Muni - Bonds funds invest in debt securities issued by states or local municipalities. These are generally used to finance construction of infrastructure, pay for schools, or other government functions. Some are backed by taxes (revenue bonds), while others are " general obligation " and may not be backed by a defined source. Investors usually appreciate the tax benefits that come with many municipal bonds, which are especially impressive for those in high tax brackets.
History of Fund/Manager
PRFHX finds itself in the T. Rowe Price family, based out of Baltimore, MD. T. Rowe Price Tax Free High Yield Retail made its debut in March of 1985, and since then, PRFHX has accumulated about $3.73 billion in assets, per the most up-to-date date available. James M. Murphy is the fund's current manager and has held that role since January of 2001.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 4.14%, and is 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 4.77%, which places it in the middle third during this time-frame.
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, PRFHX's standard deviation comes in at 7.08%, compared to the category average of 12.32%. The standard deviation of the fund over the past 5 years is 6.03% compared to the category average of 10.42%. This makes the fund less volatile than its peers over the past half-decade.
This fund has a beta of 0.8, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, PRFHX has a negative 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, PRFHX has 47.51% in medium quality bonds, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 22.74%, giving PRFHX an average quality of BBB. This means that it focuses on medium quality securities.
However, it is worth noting that 28 % 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, PRFHX is a no load fund. It has an expense ratio of 0.63% compared to the category average of 0.80%. PRFHX is actually cheaper than its peers when you consider factors like cost.
This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $100.
Bottom Line
Overall, T. Rowe Price Tax Free High Yield Retail ( PRFHX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
Your research on the Muni - Bonds segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.