TAXF vs. FAAR
TAXF (American Century Diversified Municipal Bond ETF) and FAAR (First Trust Alternative Absolute Return Strategy ETF) are both exchange-traded funds - TAXF is a Municipal Bonds fund actively managed by American Century, while FAAR is a Commodities fund actively managed by First Trust. Both are actively managed. Over the past 5 years, TAXF returned 1.07%/yr vs 8.07%/yr for FAAR. At a correlation of -0.02, they often move in opposite directions. TAXF charges 0.29%/yr vs 0.95%/yr for FAAR.
Performance
TAXF vs. FAAR - Performance Comparison
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Returns By Period
In the year-to-date period, TAXF achieves a 1.96% return, which is significantly lower than FAAR's 25.73% return.
TAXF
- 1D
- -0.01%
- 1M
- 0.82%
- YTD
- 1.96%
- 6M
- 2.23%
- 1Y
- 8.33%
- 3Y*
- 4.23%
- 5Y*
- 1.07%
- 10Y*
- —
FAAR
- 1D
- 0.01%
- 1M
- -0.79%
- YTD
- 25.73%
- 6M
- 23.17%
- 1Y
- 40.73%
- 3Y*
- 11.79%
- 5Y*
- 8.07%
- 10Y*
- 5.17%
TAXF vs. FAAR - Yearly Performance Comparison
| 2026 (YTD) | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | |
|---|---|---|---|---|---|---|---|---|---|
TAXF American Century Diversified Municipal Bond ETF | 1.96% | 4.30% | 1.74% | 7.33% | -9.64% | 2.72% | 5.55% | 8.75% | 0.64% |
FAAR First Trust Alternative Absolute Return Strategy ETF | 25.73% | 8.07% | 5.97% | -5.63% | 10.15% | 12.34% | 8.60% | -1.28% | -7.05% |
Correlation
The correlation between TAXF and FAAR is -0.15, meaning they tend to move in opposite directions. This is especially valuable for risk management - when one declines, the other has historically tended to hold steady or rise.
| Correlation | |
|---|---|
Correlation (1Y) Calculated over the trailing 1-year period | -0.15 |
Correlation (3Y) Calculated over the trailing 3-year period | -0.03 |
Correlation (5Y) Calculated over the trailing 5-year period | -0.03 |
Correlation (All Time) Calculated using the full available price history since Sep 13, 2018 | -0.02 |
The correlation between TAXF and FAAR shifts across timeframes, from -0.15 (1 year) to -0.02 (all time), reflecting how their relationship changes across market environments.
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Return for Risk
TAXF vs. FAAR — Risk / Return Rank
TAXF
FAAR
TAXF vs. FAAR - Risk-Adjusted Trends Comparison
This table presents a comparison of risk-adjusted performance metrics for American Century Diversified Municipal Bond ETF (TAXF) and First Trust Alternative Absolute Return Strategy ETF (FAAR). Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.
| TAXF | FAAR | Difference | |
|---|---|---|---|
| Sharpe ratioReturn per unit of total volatility | -0.30 | ||
| Sortino ratioReturn per unit of downside risk | -0.26 | ||
| Omega ratioGain probability vs. loss probability | 1.59 | 1.52 | +0.07 |
| Calmar ratioReturn relative to maximum drawdown | 2.86 | 8.44 | -5.58 |
| Martin ratioReturn relative to average drawdown | 10.30 | 23.64 | -13.33 |
Data is calculated on a 1-year rolling basis and updated daily. The trend shows the change in the indicator over the past month. | |||
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Sharpe Ratios by Period
| TAXF | FAAR | Difference | |
|---|---|---|---|
Sharpe Ratio (1Y)Calculated over the trailing 1-year period | 2.74 | 3.04 | -0.30 |
Sharpe Ratio (5Y)Calculated over the trailing 5-year period | 0.26 | 0.62 | -0.37 |
Sharpe Ratio (10Y)Calculated over the trailing 10-year period | — | 0.45 | — |
Sharpe Ratio (All Time)Calculated using the full available price history | 0.62 | 0.45 | +0.17 |
Drawdowns
TAXF vs. FAAR - Drawdown Comparison
The maximum TAXF drawdown since its inception was -13.93%, smaller than the maximum FAAR drawdown of -18.03%. Use the drawdown chart below to compare losses from any high point for TAXF and FAAR.
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Drawdown Indicators
| TAXF | FAAR | Difference | |
|---|---|---|---|
Max DrawdownLargest peak-to-trough decline | -13.93% | -18.03% | +4.10% |
Max Drawdown (1Y)Largest decline over 1 year | -2.93% | -4.85% | +1.92% |
Max Drawdown (3Y)Largest decline over 3 years | -5.53% | -11.54% | +6.01% |
Max Drawdown (5Y)Largest decline over 5 years | -13.93% | -18.03% | +4.10% |
Max Drawdown (10Y)Largest decline over 10 years | — | -18.03% | — |
Current DrawdownCurrent decline from peak | -0.48% | -1.11% | +0.63% |
Average DrawdownAverage peak-to-trough decline | -3.14% | -7.85% | +4.71% |
Ulcer IndexDepth and duration of drawdowns from previous peaks | 0.81% | 1.73% | -0.92% |
Volatility
TAXF vs. FAAR - Volatility Comparison
The current volatility for American Century Diversified Municipal Bond ETF (TAXF) is 0.99%, while First Trust Alternative Absolute Return Strategy ETF (FAAR) has a volatility of 2.44%. This indicates that TAXF experiences smaller price fluctuations and is considered to be less risky than FAAR based on this measure. The chart below showcases a comparison of their rolling one-month volatility.
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Volatility by Period
| TAXF | FAAR | Difference | |
|---|---|---|---|
Volatility (1M)Calculated over the trailing 1-month period | 0.99% | 2.44% | -1.45% |
Volatility (6M)Calculated over the trailing 6-month period | 2.24% | 9.72% | -7.48% |
Volatility (1Y)Calculated over the trailing 1-year period | 3.05% | 13.48% | -10.43% |
Volatility (5Y)Calculated over the trailing 5-year period, annualized | 4.20% | 13.02% | -8.82% |
Volatility (10Y)Calculated over the trailing 10-year period, annualized | 4.65% | 11.51% | -6.86% |
TAXF vs. FAAR - Expense Ratio Comparison
TAXF has a 0.29% expense ratio, which is lower than FAAR's 0.95% expense ratio.
Dividends
TAXF vs. FAAR - Dividend Comparison
TAXF's dividend yield for the trailing twelve months is around 3.47%, less than FAAR's 9.15% yield.
| Position | TTM | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|---|---|---|
FAAR First Trust Alternative Absolute Return Strategy ETF | 9.15% | 11.63% | 3.45% | 3.20% | 5.82% | 6.49% | 3.05% | 1.02% | 0.58% | 2.83% |
TAXF American Century Diversified Municipal Bond ETF | 3.47% | 3.68% | 3.38% | 2.93% | 2.05% | 1.58% | 2.13% | 2.64% | 0.69% | 0.00% |
Frequently Asked Questions
TAXF and FAAR have a correlation of -0.15, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.
FAAR has higher volatility (2.44%) compared to TAXF (0.99%). In terms of maximum drawdown, TAXF dropped -13.93% vs FAAR's -18.03%.
On 5-year performance, FAAR leads with 8.07% vs 1.07% for TAXF. On fees, TAXF is cheaper at 0.29% per year. On volatility, TAXF has been the lower-risk option at 0.99%. The better choice depends on whether you care most about return, fees, risk, or income.
Over the 5-year period, FAAR has performed better with a 8.07% return vs 1.07%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.
TAXF is cheaper with a 0.29% expense ratio, compared with 0.95% for FAAR.
FAAR has the higher dividend yield at 9.15%, compared with 3.47% for TAXF.
TAXF is categorized as Municipal Bonds, while FAAR is Commodities. They also come from different issuers: American Century and First Trust. Their fees differ too: 0.29% for TAXF and 0.95% for FAAR.
FAAR currently has the higher Sharpe Ratio (3.04 vs 2.74), meaning it's delivered slightly more return per unit of risk over the trailing 12 months. However, this ranking shifts over time - use the Risk/Return Score above for a more comprehensive view that combines Sharpe, Sortino, and other measures used by quantitative funds.
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