Mutual funds provide the easiest way for everyday investors to finance affordable housing projects, health care facilities, and other infrastructure that supports resilient local communities. Often, these investments are through mortgage-backed securities that target these communities, providing much-needed financing on reasonable terms.
Let's look at what's in the fund and whether it could be a good option for your portfolio.
What's in the fund?
The Access Capital Community Investment Fund (ACASX) builds stronger communities by supporting affordable housing, job creation, health care, and infrastructure projects that foster sustainable economic development. With a long history of meeting Community Reinvestment Act requirements, the fund qualifies as a Public Welfare Investment.
In particular, the fund invests in high-quality debt securities and other debt instruments that support low- and moderate-income individuals and communities throughout the United States. At the same time, it seeks a return consisting of current income and capital appreciation that's competitive relative to the Bloomberg U.S. Aggregate Bond TR index.
The fund's portfolio consists of 93% mortgage-backed securities and agency-secured securities. Meanwhile, the remainder of the portfolio consists of about 3% municipal bonds and 3% cash and equivalents. More than 97% of these holdings have an AAA rating, translating to the highest possible credit quality and a safe option for investors.
Should you invest?
The Access Capital Community Investment Fund offers a competitive yield and a modest expense ratio of 0.80%, making it an excellent alternative to high-grade bond allocations. In addition, with an effective duration of 5.6 years, the fund isn't particularly susceptible to interest rate risk, making it a reasonable choice during rising rate environments.
Impact investors may consider the fund a drop-in replacement for their core bond holdings. However, the fund is non-diversified and may not offer the exact characteristics of other diversified core bond allocations. As a result, investors may want to consult with their financial advisors or other investment professionals before making the switch.
The bottom line
The Access Capital Community Investment Fund offers investors an easy way to invest in building stronger communities. With a $2,500 minimum, it's accessible to many retirement portfolios and provides a competitive interest rate at a low expense ratio. As a result, investors interested in making an impact with their bond allocations may want to take a look.