LTNYX
Invesco Rochester Ltd-Term NY Muni-A
Tax-Exempt Income for New York Residents
The Invesco Rochester Ltd-Term NY Muni-A (LTNYX) is specifically designed to provide investors with a high level of 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 achieves this by investing at least 95% of its net assets in securities issued by the State of New York and its political subdivisions. This focus on New York municipal bonds not only provides tax benefits but also supports local infrastructure and development projects.
At A Glance
Executive Summary
LTNYX offers tax-exempt income with a 3.23% yield, focusing on NY municipal bonds. Its 0.90% expense ratio is competitive in its category.
Tax-exempt income for NY residents High yield of 3.23% Focus on NY municipal bonds
Limited geographic diversification Higher expense ratio than some peers Negative alpha indicating underperformance
Performance Analysis: A Mixed Bag
LTNYX has shown a mixed performance over various time frames. Over the past year, the fund has delivered a return of 6.73%, which is commendable given the current economic climate. However, its performance over longer periods, such as the three-year and five-year marks, has been less impressive, with returns of 0.10% and 1.28% respectively. The fund’s inception return stands at 4.05%, indicating that while it has potential, recent years have been challenging. This mixed performance can be attributed to various factors, including interest rate fluctuations and the specific economic conditions affecting New York State.
Risk Metrics: Understanding the Volatility
The risk metrics for LTNYX reveal a fund that is relatively stable but not without its challenges. With a beta of 0.81, the fund is less volatile than the market, which is typical for municipal bond funds. However, the negative alpha of -0.79% suggests that the fund has underperformed its benchmark, the BBG Muni USD Index. The Sharpe Ratio of -0.29 further indicates that the fund’s returns have not been sufficient to compensate for its risk. Despite these concerns, the fund’s standard deviation of 0.78% and downside risk of 0.37 suggest that it maintains a relatively low level of volatility, which can be appealing to risk-averse investors.
Portfolio Composition: A Focus on Municipal Bonds
LTNYX’s portfolio is heavily weighted towards municipal bonds, with 99.36% of its assets allocated to this sector. This concentration reflects the fund’s objective of providing tax-exempt income through investments in New York State and its political subdivisions. The top holdings include various revenue bonds from entities such as the New York State Thruway Authority and the New York City Transitional Finance Authority. This focus on municipal bonds not only aligns with the fund’s tax-exempt income objective but also provides a degree of stability, as these bonds are generally considered lower risk compared to corporate bonds.
Comparative Analysis: How LTNYX Stacks Up
When compared to similar funds, LTNYX offers a competitive yield of 3.23%, which is attractive for investors seeking tax-exempt income. However, its expense ratio of 0.90% 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 and higher yields. Additionally, LTNYX’s one-year return of 6.73% is lower than the returns of these comparable funds, indicating that while it offers tax benefits, there may be more cost-effective options available for investors willing to consider funds with broader geographic exposure.
Expense Ratio: A Consideration for Cost-Conscious Investors
The expense ratio of LTNYX stands at 0.90%, which is relatively high compared to some of its peers in the municipal bond category. This is an important consideration for cost-conscious investors, as higher expense ratios can erode returns over time. While the fund offers the benefit of tax-exempt income, investors should weigh this against the cost of investing in the fund. It’s worth noting that some similar funds, such as the Invesco CA Limited-Term Municipal-A (OLCAX), offer lower expense ratios, which could result in better net returns for investors over the long term.
Suitability for Risk-Averse Investors
LTNYX is well-suited for risk-averse investors who prioritize tax-exempt income and are comfortable with a focus on New York municipal bonds. The fund’s low volatility, as indicated by its standard deviation and downside risk metrics, makes it an attractive option for those seeking stability in their investment portfolio. However, potential investors should be aware of the fund’s limited geographic diversification, as it primarily invests in New York State bonds. This focus can be both a strength and a limitation, depending on the economic conditions affecting the state.
Conclusion: A Strategic Choice for New York Residents
In conclusion, the Invesco Rochester Ltd-Term NY Muni-A (LTNYX) offers a strategic investment opportunity for New York residents seeking tax-exempt income. Its focus on New York municipal bonds provides both tax benefits and a degree of stability, making it an appealing choice for risk-averse investors. However, the fund’s higher expense ratio and mixed performance compared to peers are important considerations. Investors should carefully evaluate their investment goals and risk tolerance to determine if LTNYX aligns with their financial strategy. For those prioritizing tax efficiency and local investment, LTNYX remains a compelling option.
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Futher Reading
https://www.morningstar.com/funds/xnas/LTNYX/quote
https://finance.yahoo.com/quote/LTNYX/”>Yahoo: Invesco Rochester Ltd-Term NY Muni-A
https://ftcloud.fasttrack.net/web/chart/LTNYX
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