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Is WMFAX a Strong Bond Fund Right Now?

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Any investors hoping to find a Muni - Bonds fund could think about starting with Wells Fargo Municipals Bond Fund A (WMFAX). WMFAX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify WMFAX in the Muni - Bonds category, an area rife with potential choices. Muni - Bonds funds focus their investments on debt securities issued by state and local governments. These are typically used to pay for the construction of infrastructure, the operation of public schools, and other municipal functions. These securities can come in the form of revenue bonds, which are backed by taxes, as well as " general obligation " bonds that are not backed by a defined source. Investors are usually interested that come with most municipal bonds, which can be especially important for those in higher tax brackets.

History of Fund/Manager

WMFAX finds itself in the Wells Fargo family, based out of San Francisco, CA. Wells Fargo Municipals Bond Fund A debuted in April of 2005. Since then, WMFAX has accumulated assets of about $1.12 billion, according to the most recently available information. A team of investment professionals is the fund's current manager.

Performance

Investors naturally seek funds with strong performance. WMFAX has a 5-year annualized total return of 3.4% 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 4.44%, 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. WMFAX's standard deviation over the past three years is 4.41% compared to the category average of 13.04%. The fund's standard deviation over the past 5 years is 4.1% compared to the category average of 10.89%. This makes the fund less volatile than its peers over the past half-decade.

With a beta of 0.65, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, WMFAX has a negative alpha of -0.16, 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, WMFAX has 44.37% in high quality bonds rated at least 'AA' or higher, while 45.68% 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, WMFAX is a load fund. It has an expense ratio of 0.77% compared to the category average of 0.80%. From a cost perspective, WMFAX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $100.

Bottom Line

Overall, Wells Fargo Municipals Bond Fund A ( WMFAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, Wells Fargo Municipals Bond Fund A ( WMFAX ) looks like a good potential choice for investors right now.

Don't stop here for your research on Muni - Bonds funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare WMFAX to its peers as well 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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