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Colorado BondShares PerformanceRating
Most investors in state-specific municipal bond funds aren’t looking for home run type returns. Instead, they are typically looking for tax-free income that comes without any nasty surprises or roller coaster rides. Colorado BondShares (HICOX) delivers exactly that kind of performance for Colorado residents.
BondShares has a five-star Morningstar rating and is well regarded around the investing community. The mutual fund manager has no other offerings, so it stays focused 100% in its own niche.
Since 1999, HICOX has had a positive return every year. In 2008, when mutual fund managers everywhere moaned that “nothing was spared," Colorado BondShares managed to give its investors a positive return (+0.68%). Though tiny, it was most welcome in an investing environment where even “safer" investments lost 20%.
In fact, since 1999, Colorado BondShares has not once posted a negative return over a calendar year. How many other investments in your portfolio can say that?
Even so, Colorado BondShares is not a low performing fund. It managed returns in the 5% and 6% ranges when interest rates where at all time lows. Its after-tax yields are even higher. Investors in the top tax brackets were treated to tax-equivalent yields in the 7% and 8% neighborhoods. Not bad for a mutual fund that doesn’t have to explain away negative investment years.
Colorado BondShares isn’t for everyone. The company focuses on managing its portfolio and nothing else. There is no retail operation and no way to purchase shares directly from the company (except for multi-million dollar investors). There isn’t even a company website.
That means investors have to buy BondShares through a broker and pay a load. Its maximum front-load is 4.75%, but its expense ratio is just 0.57. Other good news is that unlike other small niche funds with good performance, the minimum investment isn’t too high for smaller investors. The minimum initial purchase is just $500. For everyone but short-term investors looking for a good tax-free investment of Colorado munis, Colorado BondShares is a good investment.