PRSMX
TRPrice Summit Municipal Intermediate-Inv
Introduction to TRPrice Summit Municipal Intermediate-Inv
The TRPrice Summit Municipal Intermediate-Inv (PRSMX) is a municipal bond fund designed to provide investors with the highest possible income exempt from federal income taxes, while maintaining moderate price fluctuation. Managed by T. Rowe Price, this fund focuses on municipal securities with a dollar-weighted average effective maturity typically ranging between five and ten years. With an expense ratio of 0.5%, PRSMX offers a competitive option for investors seeking tax-exempt income, particularly those in higher tax brackets who can benefit most from its tax advantages.
At A Glance
Executive Summary
PRSMX offers tax-exempt income with a 0.5% expense ratio, focusing on municipal bonds with moderate price fluctuation.
Tax-exempt income potential Moderate price fluctuation Strong correlation with benchmark
Negative alpha and Sharpe ratio Limited upside potential Higher expense ratio than some peers
Performance Analysis: Navigating Market Conditions
PRSMX has demonstrated varied performance over different time horizons. Over the past year, the fund achieved a return of 6.13%, which is commendable given the challenging market conditions for fixed-income securities. However, its longer-term performance has been more modest, with a ten-year annualized return of 1.97% and a five-year return of 1.12%. These figures suggest that while the fund can capitalize on short-term opportunities, its long-term growth potential may be limited. The fund’s performance is closely aligned with its benchmark, the BBG Muni USD Index, which had a one-year return of 7.51%.
Portfolio Composition: A Focus on Municipal Bonds
The portfolio of PRSMX is heavily concentrated in municipal bonds, with 98.50% of its assets allocated to this sector. This focus aligns with the fund’s objective of providing tax-exempt income. The top holdings include various Puerto Rico municipal bonds, which contribute to the fund’s yield of 2.72%. The fund also maintains a small cash position of 1.50% to manage liquidity needs. This strategic allocation allows PRSMX to offer a stable income stream while minimizing exposure to more volatile asset classes.
Risk Metrics: Understanding the Fund’s Volatility
PRSMX exhibits a relatively low level of volatility, as indicated by its standard deviation of 0.77%. The fund’s beta of 0.82 suggests it is less volatile than the broader market, which can be appealing to risk-averse investors. However, the fund’s negative alpha of -1.39% and Sharpe ratio of -0.52 indicate that it has not effectively compensated investors for the risks taken. Additionally, the fund’s upside potential is limited, with a downside risk (UI) of 0.68, highlighting the importance of considering these metrics when evaluating the fund’s risk profile.
Comparative Analysis: How PRSMX Stacks Up Against Peers
When compared to similar funds, PRSMX presents a mixed picture. For instance, the Goldman Sachs High Yield Municipal-Inst (GHYIX) offers a higher one-year return of 13.86% and a yield of 4.32%, albeit with a slightly higher beta of 0.27. Meanwhile, the Eaton Vance Nat’l UltrShrt Muni Inc-A (EXFLX) provides a lower yield of 3.31% but with a significantly lower beta of 0.08, indicating less volatility. PRSMX’s expense ratio of 0.5% is higher than some of its peers, which may be a consideration for cost-conscious investors.
Investor Suitability: Who Should Consider PRSMX?
PRSMX is particularly suitable for investors seeking tax-exempt income with moderate price fluctuation. It is ideal for those in higher tax brackets who can maximize the benefits of its tax-exempt status. The fund’s focus on municipal bonds makes it a good fit for conservative investors looking for a stable income stream without significant exposure to equity market volatility. However, potential investors should be aware of the fund’s limited upside potential and consider whether its risk-return profile aligns with their investment objectives.
Expense Ratio: Evaluating Cost Efficiency
The expense ratio of PRSMX stands at 0.5%, which is relatively competitive within the municipal bond fund category. While this is higher than some of its peers, such as the Eaton Vance Nat’l UltrShrt Muni Inc-A (EXFLX) with an expense ratio of 0.005%, it is important to consider the fund’s overall value proposition. The expense ratio reflects the cost of managing the fund, and investors should weigh this against the potential tax-exempt income and the fund’s performance relative to its benchmark. For investors prioritizing tax efficiency, the expense ratio may be justified by the fund’s focus on municipal bonds.
Conclusion: The Value Proposition of PRSMX
In conclusion, the TRPrice Summit Municipal Intermediate-Inv (PRSMX) offers a compelling option for investors seeking tax-exempt income with moderate price fluctuation. Its strong correlation with the benchmark and focus on municipal bonds make it a suitable choice for conservative investors in higher tax brackets. However, the fund’s negative alpha and limited upside potential may deter those seeking higher returns. Overall, PRSMX stands out for its tax advantages and stability, making it a valuable addition to a diversified fixed-income portfolio for the right investor profile.
Similar Securities
AMHIX: American High-Income Municipal Bond-A | Tax-Exempt Income Investment
AMHIX offers a 3.84% yield with a focus on tax-exempt income, outperforming its benchmark with a 13.83% 1-year return and a competitive 0.66% expense ratio.
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.
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.
FCOZX: Franklin CO Tax-Free Income-Adv | Tax-Free Income for Colorado Investors
FCOZX offers tax-free income with a 3.22% yield and a competitive 0.6% expense ratio, ideal for Colorado residents seeking municipal bond exposure.
FTAZX: Franklin AZ Tax-Free Income-A1 | Tax-Exempt Income for Arizona Investors
FTAZX offers Arizona residents tax-exempt income with a 3.19% yield and a competitive 0.67% expense ratio, focusing on municipal bonds.
Futher Reading
https://www.morningstar.com/funds/xnas/PRSMX/quote
https://finance.yahoo.com/quote/PRSMX/”>Yahoo: TRPrice Summit Municipal Intermediate-Inv
https://ftcloud.fasttrack.net/web/chart/PRSMX
https://www.wsj.com/market-data/quotes/mutualfund/PRSMX
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