Is ABHYX a Strong Bond Fund Right Now?

Muni – Bonds fund seekers should consider taking a look at American Century High Yield Municipals Investor (ABHYX). ABHYX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

We classify ABHYX in the Muni – Bonds category, an area rife with potential choices. Muni – Bonds funds focus their investments on debt securities issued by state and local governments. These are typically used to pay for the construction of infrastructure, the operation of public schools, and other municipal functions. These securities can come in the form of revenue bonds, which are backed by taxes, as well as ” general obligation ” bonds that are not backed by a defined source. Investors are usually interested that come with most municipal bonds, which can be especially important for those in higher tax brackets.

History of Fund/Manager

ABHYX finds itself in the American Century family, based out of Kansas City, MO. American Century High Yield Municipals Investor debuted in March of 1998. Since then, ABHYX has accumulated assets of about $244.17 million, according to the most recently available information. Joseph Gotelli is the fund’s current manager and has held that role since January of 2012.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 2.01%, and it sits in the top third among its category peers. If you’re interested in shorter time frames, do not dismiss looking at the fund’s 3 -year annualized total return of -0.13%, which places it in the middle third during this time-frame.

It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.

When looking at a fund’s performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. The standard deviation of ABHYX over the past three years is 8.9% compared to the category average of 13.14%. The fund’s standard deviation over the past 5 years is 8.94% compared to the category average of 13.9%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.83, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, ABHYX has a positive alpha of 1.11, which measures performance on a risk-adjusted basis.

Ratings

Investors should also consider a bond’s rating, which is a grade ( ‘AAA’ to ‘D’ ) given to a bond that indicates its credit quality. With this letter scale in mind, ABHYX has 20.2% in high quality bonds rated at least ‘AA’ or higher, while 27.9% are of medium quality, with ratings of ‘A’ to ‘BBB’. The fund has an average quality of BBB, and focuses on medium quality securities.

However, it is worth noting that 38 % of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, ABHYX is a no load fund. It has an expense ratio of 0.60% compared to the category average of 0.93%. Looking at the fund from a cost perspective, ABHYX is actually cheaper than its peers.

While the minimum initial investment for the product is $2,500, investors should also note that each subsequent investment needs to be at least $50.

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, American Century High Yield Municipals Investor ( ABHYX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

Don’t stop here for your research on Muni – Bonds funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare ABHYX to its peers as well for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.

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