FRHIX - Franklin High Yield Tax-Free Inc A

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Franklin High Yield Tax-Free Inc A (FRHIX)
Expense Ratio: 0.63%
Expected Lifetime Fees: $19,497.04

The Franklin High Yield Tax-Free Inc A fund (FRHIX) is a High Yield Muni fund started on 03/18/1986 and has $9.00 billion in assets under management. The current manager has been running Franklin High Yield Tax-Free Inc A since 01/22/1992. The fund is rated by Morningstar. In addition to trading fees and broker commissions, this fund has 12b-1 fees of 0.10%

MarketRiders Prefers The Following ETF

Market Vectors High-Yield Muni ETF (HYD)
Expense Ratio: 0.35%
Expected Lifetime Fees: $11,154.10

The Market Vectors High-Yield Muni ETF (HYD) is an Exchange Traded Fund. It is a "basket" of securities that index the High Yield Muni investment strategy and is an alternative to a High Yield Muni mutual fund. Fees are very low compared to a comparable mutual fund like Franklin High Yield Tax-Free Inc A because computers automatically manage the stocks.

The Following High Yield Muni Funds Have Lower Fees Than Franklin High Yield Tax-Free Inc A (FRHIX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
AllianceBern High Income Municipal Adv ABTYX 43.0% 955 0.50%
American Century High-Yield Muni Instl AYMIX 27.0% 368 0.41%
American Century High-Yield Muni Inv ABHYX 27.0% 368 0.61%
American High-Income Municipal Bond F-2 AHMFX 18.0% 2,600 0.48%
Columbia High Yield Municipal Z SRH1Z 23.0% 937 0.60%
Columbia High Yield Municipal Z SRHMX 23.0% 937 0.60%
Franklin High Yield Tax-Free Inc Adv FHYVX 8.9% 9,000 0.53%
Goldman Sachs High Yield Muni Instl GHYIX 27.0% 3,500 0.57%
Invesco Van Kampen High Yield Muni Y ACTDX 16.0% 6,400 0.57%
Lord Abbett High Yield Municipal Bond I HYMIX 40.9% 1,700 0.62%
Oppenheimer Limited Term Municipal Fund Class Y OPIYX 21.0% 4,700 0.48%
PIMCO High Yield Municipal Bond I PHMIX 33.0% 382 0.54%
Prudential Municipal Hi-Inc Z PHIZX 24.0% 676 0.62%
Putnam Tax-Free High Yield Y PTFYX 14.0% 1,100 0.57%
RS High Yield Municipal Bond Y RHMYX 20.0% 253 0.41%

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Why Are These Metrics Important?

Turnover represents how much of a mutual fund's holdings are changed over the course of a year through buying and selling. Active mutual funds have an average turnover rate of about 85%, meaning that funds are turning over nearly all of their holdings every year. A high turnover means you could make lower returns because: 1) buying and selling stocks costs money through commissions and spreads and 2) the fund will distribute yearly capital gains which increases your taxes. Look for funds with turnover rates below 50%. For comparison, ETF turnover rates average around 10% or lower.

Generally, smaller funds do better than larger ones. The more assets in a mutual fund, the lower the chance that it will beat its index. Managers outperform an index by choosing stocks that are undervalued. In order to find these undervalued stocks, the manager has to know more than his competitors to develop an "edge." There are only a finite number of stocks a mutual fund manager can reasonably analyze and actively track to gain such a competitive edge. When the fund has more assets, the manager must analyze large companies because he needs to take larger positions. Large companies are more efficiently priced in the market and it becomes increasingly difficult to get an edge.