Oak Ridge Dynamic Small Cap I (ORSIX) — launched in September 2015 — seeks to capitalize...
Summit Muni: Solid Choice for Income
11/17/2015 9:00 am EST
Charlie Hill—longtime manager of this recommended fund—follows a straightforward, research-intensive strategy that continues to pay off over time, suggests Beth Foos in Morningstar FundInvestor.
T. Rowe Price Summit Muni Intermediate (PRSMX) remains a solid choice. Hill has a strong track record with this fund, which he's been running since inception.
During his tenure, the fund's returns beat 80% of its intermediate-term muni peers', while providing a relatively smooth ride for investors.
Volatility, as measured by standard deviation, clocks in below 80% of its peers since its 1993 inception.
Interest-rate bets are off the table: Hill keeps the fund's duration close to the duration of the fund's benchmark, the Barclays Intermediate Competitive (1-17 Year Maturity) Bond Index.
But he's more adventurous when it comes to the fund's yield curve positioning and will go further out on the curve when valuations are attractive.
For example, as long bonds were punished in 2013, Hill added to long-maturity bonds (15-year bonds jumped from 24% of assets at yearend 2012 to 32%) while shedding shorter-term bonds (three- to five-year bonds dropped to 20% from 27%).
As the yield curve flattened in 2014, Hill kept his overweighting to 15-year bonds but added to his stake in the shorter end of the curve.
Historically, Hill has preferred mid-quality bonds, keeping allocations to the highest-rated bonds below the category average and the stake in the index. This is not set in stone.
In 2013, after higher-rated muni bonds suffered from the summer bond-market sell-off, he added to the fund's AAA stake on market weakness (13% at yearend up from 8% a year before) while reducing AAs from 46% to 37%.
In 2014, Hill returned to a focus on value in AA rated bonds (47% as of December 31, 2014) while keeping an overweighting to bonds rated A and below.
He prefers revenue bonds to general-obligation bonds and believes his team and their analytic tools are capable of navigating the riskier waters within his favored sectors deftly.
A sound strategy, experienced manager team, and focus on research and quantitative analytics should serve investors well, earning the fund our top Morningstar Analyst Rating of Gold.
More from MoneyShow.com:
Related Articles on FUNDS
One of the areas of the investment world that has been gaining in popularity in the last five years ...
On August 1, Fidelity took direct aim at index fund competitors Vanguard, Blackrock’s iShares ...
Investors often ask me how to build a portfolio that holds its own in down times but hands them soli...