American High Income Muni Bond Fund A Investment Analysis

American High Income Muni Bond Fund A is designed to provide a high level of income, with a focus on tax-exempt municipal bonds.

The fund has a significant allocation to investment-grade bonds, with over 70% of its holdings in bonds rated AAA or AA.

This investment-grade focus is a key factor in the fund's relatively low credit risk.

The fund's average maturity is around 10 years, which can help to reduce interest rate risk.

A different take: Are Muni Bonds a Good Investment

The American High-Income Municipal Bond Fund A has its roots in the American Funds family, with an inception date of May 11, 2012. This fund is a member of the Fixed Income global asset class and is specifically categorized within the Municipal Bond fund group.

The fund's legal name is the American High-Income Municipal Bond Fund, and it's managed by Chad Rach. The fund's share class is A, and it's denominated in USD, with a domicile in the US.

Here's a breakdown of the fund's holdings:

The American High-Income Municipal Bond A fund has an expense ratio of 0.66%, which is 32% lower than its category average.

This fund's expense ratio grade is a B, indicating that it's below average compared to other funds in the High Yield Muni category. High annual expense ratios can reduce your rate of return, so it's essential to consider this when evaluating the fund's performance.

The fund's portfolio turnover rate is 42%, which is slightly higher than the category average of 41%. This means the fund holds its assets for around 0.0 years, which can translate to higher expenses and lower aftertax returns.

Here's a summary of the fund's recent performance:

The performance of a fund is crucial in determining its overall value. American High-Income Municipal Bond A has an impressive return of -1.4% in December 2024, which earned it a grade of B.

The High Yield Muni category had an average return of -1.5% during the same period. This means that American High-Income Municipal Bond A outperformed its category average.

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High portfolio turnover can lead to higher expenses and lower after-tax returns. American High-Income Municipal Bond A has a portfolio turnover rate of 42%, which is in line with the average turnover rate of 41% for the High Yield Muni category.

The expense ratio of a fund measures how much of its assets are used for administrative expenses and operating expenses. American High-Income Municipal Bond A has an expense ratio of 0.66%, which is 32% lower than its category average.

Here's a comparison of the expense ratio of American High-Income Municipal Bond A with its category average:

This means that American High-Income Municipal Bond A has a lower expense ratio compared to its category average, which can result in higher returns for investors.

US High Yield Bonds have been performing well, with some funds returning as high as 6.4% over the last year. This is according to a recent review of high-yield municipal bond funds.

One fund, Invesco Short Duration High Yld Muni Y (ISHYX), has returned 6.4% over the last year, making it one of the top performers in the category. However, its performance can be volatile, with a standard deviation of 8.9%.

Here are some of the top performing high-yield municipal bond funds over the last year:

These funds have been able to generate strong returns due to their focus on high-yield municipal bonds, which offer higher interest rates to compensate for the higher credit risk.

The American High-Income Municipal Bond A fund has a total expense ratio of 0.66%, which is 32% lower than its category average, making it a relatively cost-effective option.

This expense ratio is comprised of several fees, including an advisor fee expense of 0.2910%, a transfer agency fee expense of 0.1062%, an administrator fee expense of 0.0300%, and an expense waiver of 0.0105%.

These fees are broken down into more specific categories, including auditor fee expense, board of directors fee expense, custodian fee expense, other fee expense, registration fee expense, shareholder reporting fee expense, and transfer agency fee expense.

Here's a breakdown of the fund's fees:

The total expense ratio is 0.4396%, which is the sum of all these individual fees.

The American High Income Municipal Bond Fund A has a portfolio that's primarily focused on domestic bonds, making up 91.1% of the fund's allocation. This is a significant portion of the overall portfolio.

The fund has a total of 3390 holdings, with the top 10 holdings accounting for only 4.9% of the total portfolio. This suggests a diversified portfolio with minimal concentration risk.

The fund's portfolio turnover is relatively high, at 42%, indicating that the fund managers are actively buying and selling securities to maintain the fund's asset allocation.

Broaden your view: What Is Asset Allocation Fund

Assets Under Management is a crucial factor to consider in your portfolio. The fund's $5 billion in total assets is above the $667 million average for the High Yield Muni category.

This is a significant advantage, as it typically leads to lower expense ratios. However, it's worth noting that large assets under management can sometimes make it difficult for the manager to fully employ their active strategy.

The American High-Income Municipal Bond A fund distributes its dividend income monthly, which can be beneficial for investors looking for regular income. Its trailing dividend yield of 3.85% is below the 4.09% category average, but still provides a decent return.

Asset Allocation is a crucial aspect of portfolio management. It determines how your investments are distributed among different asset classes, such as bonds, stocks, and cash.

The American High-Income Municipal Bond A (AMHIX) fund has a very conservative asset allocation, with 99.49% of its assets invested in bonds. This is a significant allocation, indicating that the fund is primarily focused on generating income through tax-exempt bonds.

Bonds are the primary asset class in the AMHIX fund, with a weighting of 99.49%. This is a higher allocation than I've seen in other funds, and it suggests that the fund is targeting a high level of current income.

Here's a breakdown of the fund's bond allocation:

The AMHIX fund's asset allocation is quite focused on bonds, which is not surprising given its investment objective of generating high current income.

In my analysis of the portfolio, I've identified the top 10 holdings that make up a significant portion of the overall investment.

The Commonwealth of Puerto Rico is the largest holding at 0.0% with a market value of $510.92 million.

The portfolio also includes the Commonwealth of Puerto Rico FRN, which has a market value of $430.76 million.

Another notable holding is the Puerto Rico Sales Tax Financing Corp, which has a market value of $460.58 million.

The UIPA Crossroads Public Infrastructure District AJL Project Area is a significant holding at 4.375% with a market value of $520.40 million.

The Buckeye Tobacco Settlement Financing Authority is also a substantial holding at 5.0% with a market value of $550.39 million.

The Waste Pro USA Inc is a holding at 3.0% with a market value of $320.39 million.

The Brooklyn Events Center LLC is a holding at 5.0% with a market value of $420.37 million.

The CSCDA Community Improvement Authority Union South Bay is a holding at 4.0% with a market value of $560.35 million.

The Triborough Bridge Tunnel Authority FRN is a holding at 3.5% with a market value of $350.35 million.

The Puerto Rico Commonwealth Aqueduct Sewer Authority is a holding at 4.0% with a market value of $420.33 million.

Here's a breakdown of the top 10 holdings in the portfolio:

The American High Income Muni Bond Fund A (AMHIX) has a Dividend Yield of 3.57%, which is within the Category High of 5.94%. This is a relatively high yield, indicating that the fund is providing a significant portion of its returns to investors in the form of dividends.

The Dividend Yield of AMHIX is higher than the Category Low of 0.00%. This suggests that AMHIX is a more attractive option for investors seeking dividend income.

Here's a comparison of the Dividend Yield of AMHIX to another fund, ABHFX, which has a Dividend Yield of 3.55%. Both funds have Dividend Yields within the Category High of 5.94%. However, AMHIX has a slightly higher Dividend Yield than ABHFX, which may be a consideration for investors.

Distributions can be a complex topic, but let's break it down simply. Distributions are a way to share the returns of an investment, such as a mutual fund, with its shareholders.

There are two main types of distributions: capital gains distributions and ordinary income distributions. Capital gains distributions occur when a fund sells securities at a profit. Ordinary income distributions, on the other hand, are made up of dividends and interest income.

Mutual funds are required to distribute at least 90% of their capital gains to shareholders each year. This is known as a "90% rule" and it helps to minimize taxes for investors.

Curious to learn more? Check out: Capital Gains American Funds

Dividend Yield Analysis is a crucial aspect of evaluating a fund's performance and potential. Dividend Yield is the percentage return a fund provides to its investors in the form of dividends.

The Dividend Yield for AMHIX is 3.57%, which is significantly higher than the Category Low of 0.00%. This suggests that AMHIX is providing a substantial return to its investors.

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In comparison, the Dividend Yield for ABHFX is 3.55%, which is also higher than the Category Low. However, it's worth noting that both funds have a Category High of 5.94%, indicating that there is still room for growth.

Here's a comparison of the Dividend Yields for AMHIX and ABHFX, along with their % Rank within their respective categories:

As you can see from the table, both funds have a relatively high Dividend Yield, but ABHFX has a slightly higher % Rank, indicating that it is performing better within its category.

A fund manager for an American high income muni bond fund is responsible for selecting the bonds to buy and sell in the portfolio. They must have a deep understanding of the municipal bond market and the ability to navigate complex financial data.

The fund manager's goal is to generate high income for investors while minimizing risk. This is achieved by investing in bonds with high credit ratings and low default risk.

The fund manager must also stay up-to-date on changes in interest rates and economic conditions, which can impact the value of the bonds in the portfolio. This requires constant monitoring of market trends and economic indicators.

The fund manager's investment decisions can have a significant impact on the performance of the fund. A skilled and experienced fund manager can help the fund outperform its peers and achieve its investment objectives.

The fund manager typically has a team of analysts and researchers who help with the investment process. These team members provide valuable insights and data to inform the fund manager's decisions.

The fund manager's compensation is typically tied to the performance of the fund. They may receive a base salary, bonuses for meeting certain performance targets, and a percentage of the fund's profits.

The American High Income Muni Bond Fund A has some impressive numbers, but let's take a closer look at how it stacks up against its peers.

Over the past year, the fund's 1-year performance of 6.4% ranks 21.89% in its category, which is a decent showing. However, its 3-year performance of 0.3% (annualized) is more concerning, ranking it 9.09% in its category.

Here's a comparison of the fund's performance to its peers over various time periods:

It's worth noting that the fund's performance in 2022 was a bit of a outlier, with a return of -14.7%, but it still managed to rank 20.71% in its category that year.

In terms of its 1-year performance, the fund ranks behind some of its peers, including the Nuveen Short Duration High Yield Municipal Bond Fund Class I, the BlackRock High Yield Municipal Fund Investor C Shares, and the Jpmorgan High Yield Municipal ETF, all of which have 1-year performances of around 7.4%.