PXOHX
Putnam OH Tax-Exempt Income-A
Tax-Free Income for Ohio Residents
The Putnam OH Tax-Exempt Income-A fund (PXOHX) is designed to provide investors with a high level of current income that is exempt from both federal and Ohio state income taxes. This makes it particularly attractive for Ohio residents seeking to maximize their after-tax income. The fund primarily invests in investment-grade municipal bonds, which are known for their stability and lower risk compared to other bond types. With a focus on intermediate to long-term maturities, PXOHX aims to balance income generation with capital preservation, making it a suitable choice for conservative investors who prioritize tax efficiency.
At A Glance
Executive Summary
PXOHX offers Ohio residents tax-free income with a 2.83% yield, focusing on investment-grade municipal bonds. Competitive in its category with a 0.91% expense ratio.
Tax-free income for Ohio residents Focus on investment-grade bonds Competitive yield of 2.83%
Higher expense ratio compared to peers Limited growth potential Concentration in Ohio municipal bonds
Performance in the Municipal Bond Sector
PXOHX has demonstrated a solid performance within the municipal bond sector, with a one-year return of 8.04%, outperforming its benchmark, the BBG Muni USD Index, which returned 7.51% over the same period. This performance is indicative of the fund’s effective management and strategic allocation within the municipal bond market. The fund’s focus on investment-grade bonds has contributed to its stability and consistent returns, making it a reliable option for investors seeking steady income. Despite a modest five-year annualized return of 0.90%, the fund’s recent performance suggests a positive trend, particularly in the current low-interest-rate environment.
Risk Metrics and Stability
PXOHX exhibits a strong risk profile with a beta of 1.07, indicating a slightly higher volatility compared to the benchmark. However, its high correlation of 99.16% with the benchmark suggests that the fund’s performance closely tracks the municipal bond market. The fund’s alpha of 0.52% reflects its ability to generate returns above the benchmark, while the Sharpe ratio of 0.15 indicates a moderate risk-adjusted return. The fund’s standard deviation of 1.01% and Treynor ratio of 0.48 further highlight its stability and effective risk management, making it a suitable choice for risk-averse investors.
Portfolio Composition and Top Holdings
The fund’s portfolio is heavily weighted towards municipal bonds, with 92.78% of its assets allocated to this sector. This concentration underscores the fund’s commitment to providing tax-exempt income. The top holdings include bonds from Hamilton County, Cleveland Public Power System, and Franklin County, among others, each contributing a small percentage to the overall portfolio. This diversification within Ohio municipal bonds helps mitigate risk while ensuring a steady income stream. The fund also maintains a cash position of 7.22%, providing liquidity and flexibility to respond to market changes.
Comparative Analysis with Similar Funds
When compared to similar funds, PXOHX holds its ground with a competitive yield of 2.83% and a focus on tax-exempt income. While its expense ratio of 0.91% is higher than some peers, such as Sit Tax-Free Income (SNTIX) with an expense ratio of 0.0094, PXOHX offers a unique advantage for Ohio residents with its state-specific tax benefits. Other funds like DWS Strategic High Yield Tax-Free-A (NOTAX) and Transamerica High-Yield Municipal-A (THAYX) offer higher yields but come with increased risk due to their focus on high-yield bonds. PXOHX’s investment-grade focus provides a more conservative approach, appealing to risk-averse investors.
Expense Ratio and Cost Efficiency
The expense ratio of PXOHX stands at 0.91%, which is relatively higher compared to some of its peers in the municipal bond category. This could be a consideration for cost-conscious investors. However, the fund’s focus on providing tax-exempt income and its strategic allocation in investment-grade bonds may justify the higher cost for those prioritizing tax efficiency and stability. The fund’s management team leverages their expertise to navigate the municipal bond market effectively, aiming to deliver consistent returns that offset the expense ratio over time.
Suitability for Conservative Investors
PXOHX is particularly well-suited for conservative investors who prioritize income stability and tax efficiency. Its focus on investment-grade municipal bonds ensures a lower risk profile, making it an attractive option for those seeking to preserve capital while generating tax-free income. The fund’s performance, coupled with its strategic allocation and risk management, aligns with the needs of investors looking for a reliable income stream without exposure to high volatility. Ohio residents, in particular, can benefit from the state-specific tax advantages, enhancing the fund’s appeal for those in higher tax brackets.
Conclusion: A Strategic Choice for Ohio Residents
In conclusion, the Putnam OH Tax-Exempt Income-A fund (PXOHX) stands out as a strategic choice for Ohio residents seeking tax-free income. Its focus on investment-grade municipal bonds, coupled with a competitive yield of 2.83%, makes it a compelling option for conservative investors. While the expense ratio is higher than some peers, the fund’s tax advantages and stability offer significant value. Investors looking for a reliable income stream with minimal risk will find PXOHX to be a suitable addition to their portfolio, particularly those residing in Ohio who can fully leverage the tax benefits.
Similar Securities
PPNAX: Putnam Strategic Intermediate Muni-A | Tax-Exempt Income Investment
PPNAX offers tax-exempt income with a 3.02% yield, focusing on investment-grade municipal bonds. Its 0.90% expense ratio is competitive in its category.
VKMMX: Invesco Municipal Income-A | Tax-Exempt Income & Capital Preservation
VKMMX offers tax-exempt income with a 3.78% yield, focusing on investment-grade municipal bonds. It stands out with a high correlation to its benchmark.
PXMAX: Putnam MA Tax-Exempt Income-A | Tax-Free Income for MA Residents
PXMAX offers tax-free income with a 2.81% yield, focusing on Massachusetts municipal bonds, suitable for conservative investors.
OLCAX: Invesco CA Limited-Term Municipal-A | Tax-Exempt Income Investment
OLCAX offers tax-exempt income with a focus on California municipal bonds, featuring a 2.92% yield and a 0.93% expense ratio.
PRXCX: TRPrice CA Tax-Free Bond-Inv | Tax-Free Income from California Bonds
PRXCX offers tax-free income with a 3.22% yield and a focus on California municipal bonds, featuring a competitive 0.57% expense ratio.
Futher Reading
https://finance.yahoo.com/quote/PXOHX/”>Yahoo: Putnam OH Tax-Exempt Income-A
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