PTEIX
Putnam NY Tax-Exempt Income-A
Tax-Free Income for New York Residents
The Putnam NY Tax-Exempt Income-A (PTEIX) is specifically designed to provide a high level of current income that is exempt from federal, New York State, and city 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 investors can benefit from tax-free income while also aiming for capital preservation. With a yield of 3.16%, PTEIX offers a competitive income stream compared to other municipal bond funds, making it a suitable choice for those in higher tax brackets seeking to reduce their tax liabilities.
At A Glance
Executive Summary
PTEIX offers tax-free income with a 3.16% yield and a focus on New York municipal bonds, providing stability and capital preservation.
Tax-free income for NY residents; High yield of 3.16%; Strong correlation with benchmark.
Higher expense ratio than peers; Limited sector diversification; Moderate historical returns.
Performance Amidst Market Fluctuations
PTEIX has demonstrated resilience in its performance, particularly over the past year, with a notable 9.52% return. This is significantly higher than its benchmark, the BBG Muni USD Index, which returned 7.51% over the same period. The fund’s ability to outperform its benchmark highlights its effective management and strategic allocation within the municipal bond sector. However, over longer periods, such as the three-year and five-year marks, the fund has shown more modest returns of -0.54% and 1.07%, respectively. This suggests that while the fund can capitalize on short-term market opportunities, investors should be mindful of its performance consistency over extended periods.
Strategic Portfolio Composition
The portfolio of PTEIX is heavily weighted towards municipal bonds, with 98.73% of its assets allocated in this sector. This strategic focus allows the fund to maintain its objective of providing tax-exempt income while preserving capital. The top holdings include various New York municipal bonds, such as the New York Liberty Development Corporation Liberty Revenue bonds and the New York City Transitional Finance Authority Revenue bonds. These holdings are selected for their credit quality and potential to deliver stable income. The fund’s minimal exposure to other asset classes, such as cash at 1.19%, underscores its commitment to its municipal bond strategy.
Risk and Return Metrics
PTEIX exhibits a balanced risk profile with a beta of 1.25, indicating a slightly higher volatility compared to its benchmark. The fund’s alpha of 2.01% suggests that it has been able to generate returns above the expected level given its risk, which is a positive indicator for potential investors. The Sharpe ratio of 0.49 and Treynor ratio of 1.60 further illustrate the fund’s ability to provide returns relative to its risk. Additionally, the fund’s standard deviation of 1.18% and downside risk of 0.98 highlight its relatively stable performance, making it a viable option for risk-averse investors seeking steady income.
Comparative Analysis with Peers
When compared to similar funds, PTEIX holds its ground with a respectable yield of 3.16%. However, its expense ratio of 0.87% is higher than some of its peers, such as the Sit Tax-Free Income (SNTIX) and DWS Strategic High Yield Tax-Free-A (NOTAX), which have lower expense ratios of 0.94% and 0.88%, respectively. Despite this, PTEIX’s focus on New York municipal bonds provides a unique advantage for investors specifically seeking tax-exempt income within this state. The fund’s one-year return of 9.52% is competitive, though it trails behind the DWS Strategic High Yield Tax-Free-A’s impressive 17.42% return, indicating room for improvement in maximizing returns.
Expense Ratio and Cost Efficiency
The expense ratio of PTEIX stands at 0.87%, which is relatively higher compared to some of its peers in the municipal bond category. This could be a consideration for cost-conscious investors who are looking to minimize fees and maximize net returns. However, the fund’s focus on providing tax-exempt income and its strategic allocation in New York municipal bonds may justify the higher expense ratio for investors who prioritize tax efficiency over cost. It’s important for potential investors to weigh the benefits of tax savings against the cost of the fund’s management fees when considering PTEIX for their portfolio.
Suitability for Risk-Averse Investors
PTEIX is well-suited for risk-averse investors who prioritize capital preservation and tax-free income. The fund’s strong correlation with its benchmark (99.04%) and its low standard deviation of 1.18% indicate a stable performance profile. Additionally, the fund’s focus on high-quality New York municipal bonds provides a layer of security, as these bonds are generally considered to be lower risk compared to other fixed-income securities. Investors seeking a reliable income stream with minimal exposure to market volatility may find PTEIX to be an attractive option, especially those residing in New York who can benefit from the tax-exempt status of the income generated.
Conclusion: A Strategic Choice for New York Investors
In conclusion, the Putnam NY Tax-Exempt Income-A (PTEIX) stands out as a strategic choice for New York investors seeking tax-free income and capital preservation. Its focus on municipal bonds provides a stable income stream, while its performance metrics indicate a well-managed fund capable of navigating market fluctuations. Although the expense ratio is higher than some peers, the tax advantages and targeted investment strategy may outweigh the costs for those in higher tax brackets. PTEIX is particularly suitable for risk-averse investors who value stability and tax efficiency, making it a compelling addition to a diversified portfolio.
Similar Securities
OPTAX: Invesco AMT-Free Municipal-A | Tax-Exempt Income Investment
OPTAX offers a 3.77% yield with tax-exempt income, outperforming its benchmark with a 9.05% 1-year return.
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.
FRMOX: Franklin MO Tax-Free Income-A1 | Tax-Exempt Income for Missouri Investors
FRMOX offers Missouri residents tax-exempt income with a competitive 3.42% yield and a 0.68% expense ratio, focusing on municipal bonds.
RMUNX: Invesco Rochester NY Municipals-A | Tax-Exempt Income Investment
RMUNX offers tax-exempt income with a 4.04% yield, focusing on New York bonds. It stands out with a high alpha of 3.84% and a strong correlation to its benchmark.
MANKX: BlackRock NY Municipal Opportunity-Inst | Tax-Exempt Income for NY Investors
MANKX offers a 3.33% yield with tax-exempt income, outperforming its benchmark with a 1-year return of 8.92%.
Futher Reading
https://finance.yahoo.com/quote/PTEIX/”>Yahoo: Putnam NY Tax-Exempt Income-A
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