FTTMX
Franklin MI Tax-Free Income-A1
Tax-Exempt Income for Michigan Residents
The Franklin MI Tax-Free Income-A1 (FTTMX) is specifically designed to provide investors with a high level of income that is exempt from both federal and Michigan state personal income taxes. This makes it an attractive option for Michigan residents seeking to maximize their after-tax income. The fund achieves this by investing at least 80% of its total assets in municipal securities that are free from these taxes. This focus on tax efficiency is a key feature that distinguishes FTTMX from other investment options, particularly for those in higher tax brackets who can benefit significantly from the tax savings.
At A Glance
Executive Summary
FTTMX offers Michigan residents tax-free income with a competitive 3.14% yield and a low 0.68% expense ratio, focusing on municipal bonds.
Tax-exempt income for Michigan residents Competitive yield of 3.14% Low expense ratio of 0.68%
Limited to Michigan state tax benefits Higher beta of 1.09 indicates volatility Negative three-year return of -0.97%
Performance Amidst Market Fluctuations
FTTMX has demonstrated resilience amidst market fluctuations, as evidenced by its recent performance metrics. Over the past year, the fund has achieved an impressive 8.25% return, outperforming its benchmark, the BBG Muni USD Index, which returned 7.51%. However, the fund’s three-year annualized return is -0.97%, indicating some volatility in its performance. The fund’s beta of 1.09 suggests it is slightly more volatile than the market, which could be a consideration for risk-averse investors. Despite this, the fund’s long-term performance since inception remains strong at 4.66%, showcasing its potential for steady growth over time.
Portfolio Composition and Top Holdings
FTTMX’s portfolio is heavily weighted towards municipal bonds, with 99.48% of its assets allocated to this sector. This focus on municipal securities is aligned with the fund’s objective of providing tax-free income. The top holdings include Michigan State Housing Development Authority Single Family Mortgage Revenue bonds and Puerto Rico Sales Tax Financing Corporation Sales Tax Revenue bonds, among others. These holdings reflect the fund’s strategy of investing in high-quality municipal bonds that offer attractive yields while maintaining a low risk profile. The fund’s diversified bond holdings help mitigate risk and provide a stable income stream for investors.
Competitive Expense Ratio and Yield
One of the standout features of FTTMX is its competitive expense ratio of 0.68%, which is relatively low compared to similar funds in the municipal bond category. This low expense ratio allows investors to retain more of their returns, enhancing the overall yield of the fund. Speaking of yield, FTTMX offers a yield of 3.14%, which is attractive for investors seeking income, especially when considering the tax-exempt nature of the income. This combination of a low expense ratio and a solid yield makes FTTMX a compelling choice for income-focused investors looking for tax-efficient investment options.
Risk Metrics and Volatility Considerations
FTTMX’s risk metrics provide insight into its volatility and risk-adjusted performance. The fund has an alpha of 0.73%, indicating it has outperformed its benchmark on a risk-adjusted basis. However, its beta of 1.09 suggests that it is slightly more volatile than the market. The Sharpe ratio of 0.21 and Treynor ratio of 0.67 further highlight the fund’s risk-return profile. The fund’s standard deviation of 1.02% and R-squared of 97.59% indicate a high correlation with its benchmark, suggesting that its performance closely tracks the broader municipal bond market. Investors should consider these metrics when assessing the fund’s suitability for their risk tolerance.
Comparison with Similar Funds
When compared to similar funds, FTTMX holds its ground with a competitive yield and expense ratio. For instance, the TRPrice Tax-Free High Yield-Inv (PRFHX) offers a higher one-year return of 13.62% but comes with a slightly higher expense ratio of 0.67%. Meanwhile, the Dupree NC Tax-Free Income (NTFIX) provides a yield of 4.43% but is focused on a different state. FTTMX’s focus on Michigan-specific tax benefits makes it uniquely suited for residents of the state, offering them a tailored investment solution that other funds may not provide. This state-specific focus is a key differentiator for FTTMX.
Suitability for Income-Focused Investors
FTTMX is particularly well-suited for income-focused investors residing in Michigan who are looking to maximize their after-tax income. The fund’s emphasis on tax-exempt income, combined with its competitive yield and low expense ratio, makes it an attractive option for those in higher tax brackets. Additionally, the fund’s focus on high-quality municipal bonds provides a level of stability and predictability in income, which is appealing to conservative investors. However, potential investors should be aware of the fund’s higher beta and recent negative three-year return, which may indicate some volatility in the short term.
Conclusion: A Strategic Choice for Michigan Investors
In conclusion, the Franklin MI Tax-Free Income-A1 (FTTMX) stands out as a strategic investment choice for Michigan residents seeking tax-exempt income. Its focus on municipal bonds, competitive yield, and low expense ratio make it a compelling option for those looking to enhance their after-tax income. While the fund does exhibit some volatility, its long-term performance and tax benefits make it a suitable choice for investors with a moderate risk tolerance. For those prioritizing tax efficiency and income stability, FTTMX offers a tailored solution that aligns with their financial goals.
Similar Securities
TAFTX: American Funds Tax-Exempt Fund of CA-A | Tax-Free Income Investment
TAFTX offers tax-free income with a 2.88% yield, focusing on California municipal bonds. It has a competitive expense ratio of 0.57%.
FTGAX: Franklin GA Tax-Free Income-A1 | Tax-Exempt Income for Georgia Residents
FTGAX offers tax-free income for Georgia residents with a competitive 2.86% yield and a focus on municipal bonds.
GTFBX: TRPrice GA Tax-Free Bond-Inv | Tax-Exempt Income from Georgia Bonds
GTFBX offers tax-free income with a 3.25% yield, focusing on Georgia municipal bonds. It has a competitive expense ratio of 0.56% and strong risk metrics.
SHMMX: Western Asset Managed Municipals-A | Tax-Exempt Income Fund
SHMMX offers a 3.32% yield with a focus on tax-exempt income, boasting a high correlation with its benchmark and a competitive expense ratio.
SBNYX: Western Asset NY Municipals-A | Tax-Exempt Income for NY Investors
SBNYX offers NY tax-exempt income with a 3.05% yield and 0.8% expense ratio, ideal for tax-sensitive investors.
Futher Reading
https://finance.yahoo.com/quote/FTTMX/”>Yahoo: Franklin MI Tax-Free Income-A1
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