Is FKTIX a Strong Bond Fund Right Now?

There are plenty of choices in the Muni – Bonds category, but where should you start your research? Well, one fund that you should consider investigating is Franklin Federal Tax-Free Inc A1 (FKTIX). FKTIX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.

Zacks categorizes FKTIX 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.

Franklin is based in San Mateo, CA, and is the manager of FKTIX. The Franklin Federal Tax-Free Inc A1 made its debut in October of 1983 and FKTIX has managed to accumulate roughly $3.95 billion in assets, as of the most recently available information. The fund’s current manager is a team of investment professionals.

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 0.47%, and it sits in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 1.55%, 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. Over the past three years, FKTIX’s standard deviation comes in at 8.07%, compared to the category average of 12.65%. The fund’s standard deviation over the past 5 years is 7.02% compared to the category average of 12.23%. This makes the fund less volatile than its peers over the past half-decade.

Modified duration is a measure of a given bond’s interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.