IMNYX
Western Asset Interm Maturity NY Muni-A
Tax-Exempt Income for New York Investors
The Western Asset Interm Maturity NY Muni-A (IMNYX) is specifically designed to provide New York investors with a high level of current income that is exempt from both federal and New York State and City personal income taxes. This makes it an attractive option for tax-sensitive investors residing in New York, who are looking to maximize their after-tax income. The fund’s focus on municipal bonds ensures that the income generated is largely tax-exempt, which can be a significant advantage for investors in higher tax brackets. With a yield of 2.55%, IMNYX offers a competitive income stream while maintaining a focus on the preservation of principal, aligning with its objective of providing stable, tax-efficient returns.
At A Glance
Executive Summary
IMNYX offers NY tax-exempt income with a 2.55% yield and 0.77% expense ratio, ideal for tax-sensitive investors.
Tax-exempt income for NY residents Low correlation with equities Stable income with municipal bonds
Lower yield compared to peers Negative alpha and Sharpe ratio Limited growth potential
Performance in Context of Market Volatility
IMNYX has demonstrated resilience in the face of market volatility, with a 1-year return of 6.09%, which, while respectable, falls short of its benchmark, the BBG Muni USD Index, which returned 7.51% over the same period. The fund’s performance is characterized by a relatively low beta of 0.90, indicating less sensitivity to market movements compared to the benchmark. However, the fund’s negative alpha of -1.43% suggests that it has underperformed on a risk-adjusted basis. Despite this, the fund’s low standard deviation of 0.85% reflects its stability, making it a potentially suitable choice for conservative investors seeking steady income with lower volatility.
Portfolio Composition and Top Holdings
The fund’s portfolio is heavily concentrated in municipal bonds, with 98.73% of its assets allocated to this sector. This focus is evident in its top holdings, which include significant investments in New York-based municipal entities such as the Port Authority of New York and New Jersey and the Nassau Health Care Corporation. These holdings are primarily in bonds with a 5% coupon rate, reflecting the fund’s strategy to generate consistent income. The concentration in New York municipal bonds aligns with the fund’s objective of providing tax-exempt income to New York residents, while also supporting local infrastructure and public services.
Comparative Analysis with Similar Funds
When compared to similar funds, IMNYX offers a lower yield and higher expense ratio. For instance, the Allspring High Yield Municipal Bond-A (WHYMX) and Lord Abbett High Income Municipal Bond-A (HYMAX) both offer higher yields of 4.46% and 4.32% respectively, with significantly lower expense ratios. This comparison highlights IMNYX’s focus on tax-exempt income rather than high yield, which may appeal to investors prioritizing tax efficiency over maximum income. However, for those seeking higher returns, these alternative funds may present more attractive options, albeit with potentially higher risk profiles.
Risk Metrics and Investor Implications
The risk metrics for IMNYX indicate a conservative investment profile, with a beta of 0.90 and a standard deviation of 0.85%, suggesting lower volatility compared to the broader market. However, the fund’s negative Sharpe ratio of -0.49 and Treynor ratio of -1.59 indicate that it has not been able to generate positive returns relative to its risk. The high correlation with its benchmark (98.40%) suggests that the fund’s performance is closely tied to the municipal bond market, which can be both a strength and a limitation, depending on market conditions. Investors should consider these metrics in the context of their risk tolerance and investment goals.
Expense Ratio and Cost Efficiency
IMNYX has an expense ratio of 0.77%, which is relatively high compared to some of its peers. This could be a consideration for cost-conscious investors, as higher expenses can erode returns over time. However, the fund’s focus on providing tax-exempt income may justify the higher expense ratio for investors who benefit significantly from the tax savings. It’s important for potential investors to weigh the cost of the fund against the tax advantages it offers, particularly if they are in higher tax brackets where the tax-exempt status of the income can provide substantial benefits.
Suitability for Conservative Investors
Given its focus on municipal bonds and tax-exempt income, IMNYX is well-suited for conservative investors who prioritize income stability and tax efficiency over high returns. The fund’s low volatility and focus on preserving principal make it an attractive option for those seeking a steady income stream without significant exposure to market fluctuations. Additionally, the fund’s emphasis on New York municipal bonds aligns with the needs of New York residents looking to maximize their after-tax income. However, investors should be aware of the fund’s lower yield compared to some high-yield municipal bond funds, which may offer higher returns but with increased risk.
Conclusion: A Strategic Choice for Tax-Sensitive Investors
In conclusion, the Western Asset Interm Maturity NY Muni-A (IMNYX) stands out as a strategic choice for New York investors seeking tax-exempt income. Its focus on municipal bonds provides a stable income stream, while its tax-exempt status offers significant benefits for those in higher tax brackets. While the fund’s performance may not match some high-yield alternatives, its conservative approach and emphasis on tax efficiency make it a compelling option for investors prioritizing income stability and tax savings. Potential investors should consider their individual tax situations and investment goals when evaluating the suitability of IMNYX for their portfolios.
Similar Securities
FTOIX: Franklin OH Tax-Free Income-A1 | Tax-Exempt Income for Ohio Residents
FTOIX offers Ohio residents tax-exempt income with a 3.22% yield and a competitive 0.66% expense ratio, focusing on municipal bonds.
LTEBX: American Funds Limited Term TaxEx Bd-A | Tax-Exempt Income & Capital Preservation
LTEBX offers tax-exempt income with a focus on capital preservation, featuring a 0.6% expense ratio and 2.26% yield, ideal for conservative investors.
MANJX: BlackRock NJ Municipal Bond-Inst | Tax-Exempt Income from NJ Bonds
MANJX offers tax-exempt income with a 3.58% yield, focusing on NJ municipal bonds. It has a low expense ratio of 0.53% and strong risk metrics.
VKLMX: Invesco Intermediate-Term Muni Income-A | Tax-Exempt Income & Capital Preservation
VKLMX offers tax-exempt income with a 3.45% yield and low volatility, ideal for conservative investors seeking capital preservation.
IMNYX: Western Asset Interm Maturity NY Muni-A | Tax-Exempt Income for NY Investors
IMNYX offers NY tax-exempt income with a 2.55% yield and 0.77% expense ratio, ideal for tax-sensitive investors.
Futher Reading
https://www.morningstar.com/funds/xnas/IMNYX/quote
https://finance.yahoo.com/quote/IMNYX/”>Yahoo: Western Asset Interm Maturity NY Muni-A
https://ftcloud.fasttrack.net/web/chart/IMNYX
https://www.wsj.com/market-data/quotes/mutualfund/IMNYX
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