FNYTX
Franklin NY Tax-Free Income-A1
Tax-Exempt Income for New York Residents
Franklin NY Tax-Free Income-A1 (FNYTX) is designed to provide investors with a high level of dividend income that is exempt from federal, New York State, and New York City personal income taxes. This makes it particularly attractive for residents of New York who are looking to maximize their after-tax income. The fund’s focus on municipal bonds ensures that it aligns with its objective of preserving shareholders’ capital while delivering tax-free income. With a yield of 3.24%, FNYTX offers a compelling option for tax-sensitive investors seeking stable income streams.
At A Glance
Executive Summary
FNYTX offers tax-free income for NY residents with a 3.24% yield and a competitive 0.6% expense ratio, focusing on municipal bonds.
Tax-exempt income for NY residents Competitive expense ratio Strong correlation with benchmark
Limited sector diversification Potentially lower returns compared to peers High beta indicating volatility
Performance Metrics and Risk Analysis
FNYTX has demonstrated a solid performance with a one-year return of 9.20%, outperforming its benchmark, the BBG Muni USD Index, which returned 7.51% over the same period. The fund’s alpha of 1.69% indicates its ability to generate returns above the benchmark, while a beta of 1.23 suggests higher volatility compared to the market. The Sharpe ratio of 0.42 reflects moderate risk-adjusted returns, and the Treynor ratio of 1.37 highlights its efficiency in generating returns relative to its risk. Despite a maximum drawdown of -2.7%, the fund’s recovery potential remains strong, making it a resilient choice for investors.
Portfolio Composition and Top Holdings
The fund’s portfolio is heavily weighted towards municipal bonds, with a 99.73% allocation, ensuring a focus on tax-exempt income. Top holdings include LIBERTY N Y DEV CORP REV 5.25% and NEW YORK ST DORM AUTH REVS NON ST SUPPORTED DEBT 5%, which together constitute a significant portion of the portfolio. This concentration in high-quality municipal bonds supports the fund’s objective of providing tax-free income while maintaining capital preservation. The absence of sector diversification, with no exposure to equities or other asset classes, underscores its commitment to municipal bonds.
Comparative Analysis with Similar Funds
When compared to similar funds, FNYTX offers a competitive expense ratio of 0.6%, which is favorable compared to peers like Colorado BondShares A Tax-Exempt (HICOX) and MFS Municipal High Income-A (MMHYX), both with lower expense ratios but different risk profiles. While FNYTX’s one-year return of 9.20% is commendable, it trails behind MMHYX’s 15.20% return. However, FNYTX’s focus on New York municipal bonds provides a unique advantage for state residents seeking tax-exempt income, a feature not shared by all its peers.
Expense Ratio and Cost Efficiency
The expense ratio of 0.6% for FNYTX is competitive within the municipal bond fund category, offering cost efficiency for investors. This low expense ratio is particularly beneficial for long-term investors who are looking to minimize costs while maximizing returns. The fund’s management by Franklin Templeton Investments, a reputable firm known for its expertise in fixed income, further enhances its appeal. Investors can expect prudent management practices that align with the fund’s objective of providing tax-free income while preserving capital.
Risk and Volatility Considerations
FNYTX exhibits a beta of 1.23, indicating higher volatility compared to the benchmark. This suggests that while the fund has the potential for higher returns, it also carries a higher risk profile. The fund’s correlation with the benchmark is high at 98.76%, suggesting that its performance closely follows the municipal bond market trends. Investors should be aware of the potential for volatility, especially in changing interest rate environments, and consider their risk tolerance when investing in FNYTX.
Suitability for Tax-Sensitive Investors
FNYTX is particularly suitable for tax-sensitive investors, especially those residing in New York. The fund’s focus on providing tax-exempt income makes it an ideal choice for individuals in higher tax brackets looking to enhance their after-tax returns. Its strong correlation with the benchmark and focus on municipal bonds ensure that it remains a stable investment option. However, investors should consider the fund’s limited sector diversification and potential volatility when assessing its fit within their overall investment strategy.
Conclusion: A Strategic Choice for New York Investors
In conclusion, Franklin NY Tax-Free Income-A1 (FNYTX) stands out as a strategic choice for New York investors seeking tax-exempt income. Its focus on municipal bonds, competitive expense ratio, and strong performance metrics make it an attractive option for those looking to preserve capital while maximizing after-tax income. While the fund’s higher beta indicates potential volatility, its alignment with the benchmark and tax advantages offer compelling reasons for inclusion in a tax-sensitive portfolio. Investors should weigh the benefits of tax-exempt income against the fund’s risk profile to determine its suitability for their investment goals.
Similar Securities
FNYTX: Franklin NY Tax-Free Income-A1 | Tax-Exempt Income for NY Investors
FNYTX offers tax-free income for NY residents with a 3.24% yield and a competitive 0.6% expense ratio, focusing on municipal bonds.
MDXBX: TRPrice MD Tax-Free Bond-Inv | Tax-Free Income for Maryland Investors
MDXBX offers a 3.23% yield with a low 0.49% expense ratio, focusing on Maryland municipal bonds for tax-free income.
PRINX: TRPrice Summit Municipal Income-Inv | Tax-Exempt Income Fund
PRINX offers a 3.23% yield with a low 0.5% expense ratio, focusing on investment-grade municipal bonds for tax-exempt income.
NYAAX: American Funds Tax-Exempt Fund of NY-A | Tax-Free Income for NY Residents
NYAAX offers tax-free income for NY residents with a 2.95% yield and a competitive 0.6% expense ratio, focusing on municipal bonds.
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.
Futher Reading
https://finance.yahoo.com/quote/FNYTX/”>Yahoo: Franklin NY Tax-Free Income-A1
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