Is HICOX a Strong Bond Fund Right Now?

Zacks Equity Research
·4-min read

If you have been looking for Muni - Bonds funds, a place to start could be Colorado Bond Shares Tax-Exempt A (HICOX). HICOX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine 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. Since Colorado Bond Shares Tax-Exempt A made its debut in June of 1987, HICOX has garnered more than $1.49 billion in assets. Fred R. Kelly Jr. Is the fund's current manager and has held that role since November of 1990.

Performance

Of course, investors look for strong performance in funds. HICOX has a 5-year annualized total return of 4.74% and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 5.11%, which places it in the top 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. Compared to the category average of 3.16%, the standard deviation of HICOX over the past three years is 3.64%. Over the past 5 years, the standard deviation of the fund is 3.02% compared to the category average of 3.21%. This makes the fund less volatile than its peers over the past half-decade.

HICOX carries a beta of 0.38, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 1.97, 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, HICOX has 43.33% in high quality bonds rated at least 'AA' or higher, while 39.47% 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

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. It has an expense ratio of 0.57% compared to the category average of 0.83%. So, HICOX is actually cheaper than its peers from a cost perspective.

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

Bottom Line

Overall, Colorado Bond Shares Tax-Exempt A ( HICOX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Colorado Bond Shares Tax-Exempt A ( HICOX ) looks like a good potential choice for investors right now.

Want even more information about HICOX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Get Your Free (HICOX): Fund Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research