OPNYX
Invesco Rochester AMT-Free NY Muni-A
Introduction to Invesco Rochester AMT-Free NY Muni-A
The Invesco Rochester AMT-Free NY Muni-A (OPNYX) is a mutual fund designed to provide investors with a high level of current income that is exempt from federal income taxes. This fund primarily invests in medium and lower-grade municipal securities, making it particularly appealing to investors seeking tax-exempt income. As part of the Invesco family, OPNYX is categorized under Muni Long Term funds, focusing on municipal bonds. With a yield of 4.10%, it offers a compelling option for those looking to maximize tax-free income, especially for residents of New York who can benefit from state tax exemptions as well.
At A Glance
Executive Summary
OPNYX offers a 4.10% yield with tax-exempt income, focusing on NY municipal bonds. It has a high correlation with its benchmark and a competitive alpha.
High yield of 4.10% tax-exempt income Strong correlation with benchmark Focus on NY municipal bonds
Higher expense ratio of 1.35% Limited sector diversification Potential for higher volatility due to lower-grade bonds
Performance Metrics and Risk Analysis
OPNYX has demonstrated a robust performance with a one-year return of 10.02%, significantly outperforming its benchmark, the BBG Muni USD Index, which returned 7.51% over the same period. The fund’s alpha of 2.50% indicates its ability to generate returns above the benchmark, while a beta of 1.50 suggests higher volatility compared to the market. The Sharpe ratio of 0.51 reflects moderate risk-adjusted returns, and the Treynor ratio of 1.67 highlights its efficiency in generating returns relative to its risk. The fund’s standard deviation of 1.41% and a max drawdown of -3.3% indicate a relatively stable performance with manageable downside risk.
Portfolio Composition and Top Holdings
The portfolio of OPNYX is heavily concentrated in municipal bonds, with 99.59% of its assets allocated to this sector. This focus on municipal securities is reflected in its top holdings, which include MTA Hudson Rail Yards Tr Obligations Rev 5%, Liberty NY Dev Corp Rev 5.25%, and Utility Debt Securitization Auth NY 5%. These holdings are primarily revenue bonds, which are backed by specific revenue sources, providing a level of security and predictability in income. The fund’s strategy of investing in medium and lower-grade municipal bonds allows it to offer a higher yield, appealing to investors seeking income in a low-interest-rate environment.
Comparative Analysis with Similar Funds
When compared to similar funds, OPNYX holds its ground with a competitive yield and performance. For instance, the Invesco High-Yield Municipal-A (ACTHX) offers a higher one-year return of 13.62% but comes with a lower expense ratio of 0.0154. Meanwhile, the Invesco Rochester NY Municipals-A (RMUNX) provides a similar yield of 4.04% with a slightly lower expense ratio. OPNYX’s expense ratio of 1.35% is higher than some peers, which may be a consideration for cost-conscious investors. However, its focus on New York municipal bonds and the tax-exempt income it provides can justify the higher costs for investors prioritizing these benefits.
Expense Ratio and Cost Considerations
The expense ratio of OPNYX stands at 1.35%, which is relatively high compared to some of its peers. This cost can impact net returns, especially for long-term investors. However, the fund’s ability to deliver a high yield of 4.10% and its focus on tax-exempt income can offset these costs for investors who prioritize income over expenses. It’s important for potential investors to weigh the benefits of the fund’s tax-exempt status and its performance against the higher expense ratio. For those in higher tax brackets, the tax savings could outweigh the additional costs, making OPNYX a viable option.
Risk and Volatility Considerations
Investors should be aware of the risks associated with OPNYX, particularly its focus on medium and lower-grade municipal bonds, which can lead to higher volatility. The fund’s beta of 1.50 indicates that it is more volatile than the market, which could result in larger price swings. However, the fund’s high correlation with its benchmark (98.72%) and a strong R-squared value of 97.46% suggest that its performance closely tracks the municipal bond market, providing some predictability. The downside risk, measured by a downside risk (UI) of 1.05, is relatively low, indicating that while the fund may experience volatility, the potential for significant losses is limited.
Tax Efficiency and Investor Suitability
One of the standout features of OPNYX is its tax efficiency, offering income that is exempt from federal income taxes. This makes it particularly attractive to investors in higher tax brackets who are looking to maximize their after-tax income. Additionally, for New York residents, the fund’s focus on New York municipal bonds can provide further state tax benefits. This makes OPNYX a suitable choice for investors seeking tax-exempt income, particularly those residing in New York. However, investors should consider their individual tax situations and consult with a tax advisor to fully understand the benefits.
Conclusion: Is OPNYX Right for You?
In conclusion, the Invesco Rochester AMT-Free NY Muni-A (OPNYX) stands out for its ability to provide high tax-exempt income through a focused investment in New York municipal bonds. With a yield of 4.10% and a strong performance record, it is an attractive option for investors seeking income with tax advantages. However, the higher expense ratio and potential for volatility due to its investment in lower-grade bonds should be considered. OPNYX is best suited for investors in higher tax brackets, particularly those residing in New York, who are looking for a tax-efficient income solution. As always, potential investors should assess their risk tolerance and investment goals before making a decision.
Similar Securities
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%.
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.
FXNCX: Franklin NC Tax-Free Income-A1 | Tax-Free Income for NC Residents
FXNCX offers tax-free income for NC residents with a competitive 2.78% yield and a 0.70% expense ratio, focusing on municipal bonds.
FALZX: Franklin AL Tax-Free Income-Adv | Tax-Free Income for Alabama Residents
FALZX offers Alabama residents tax-free income with a 2.79% yield and a competitive 0.65% expense ratio, focusing on municipal bonds.
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%.
Futher Reading
https://www.morningstar.com/funds/xnas/OPNYX/quote
https://finance.yahoo.com/quote/OPNYX/”>Yahoo: Invesco Rochester AMT-Free NY Muni-A
https://ftcloud.fasttrack.net/web/chart/OPNYX
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