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If you've been stuck searching for High Yield - Bonds funds, you might want to consider passing on by AB High Income Fund C (AGDCX - Free Report) as a possibility. AGDCX bears a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
AGDCX is part of the High Yield - Bonds section, which is a segment that boasts many possible options. Often referred to as " junk " bonds, High Yield - Bonds funds sit below investment grade, meaning they are at a high default risk compared to their investment grade peers. However, one advantage to junk bonds is that they generally pay out higher yields while posing similar interest rate risks to their investment grade counterparts.
History of Fund/Manager
AGDCX is a part of the AllianceBernstein family of funds, a company based out of New York, NY. Since AB High Income Fund C made its debut in February of 1994, AGDCX has garnered more than $733.26 million in assets. The fund's current manager is a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 1.96%, and it sits in the bottom third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 4.25%, which places it in the bottom third during this time-frame.
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 AGDCX over the past three years is 4.39% compared to the category average of 8.28%. The standard deviation of the fund over the past 5 years is 5.14% compared to the category average of 8.68%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
For those that believe interest rates will rise, this is an important factor to consider. AGDCX has a modified duration of 3.77, which suggests that the fund will decline 3.77% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 6.72% means that a $10,000 investment should result in a yearly payout of $672.
If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur if rates are lower in the future when compared to the initial purchase date of the bond.
Since income is just one part of the bond picture, investors need to consider risk relative to broad benchmarks. With a beta of 0.35, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, AGDCX has a positive alpha of 0.65, 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, AGDCX 's junk bond component-bonds rated 'BB' or below-is at 61.41%. This means that the fund has an average quality of BBB, and focuses on medium quality securities.
Expenses
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, AGDCX is a no load fund. It has an expense ratio of 1.59% compared to the category average of 1.02%. Looking at the fund from a cost perspective, AGDCX is actually more expensive than its peers.
Investors should also note that the minimum initial investment for the product is $2,500 and that each subsequent investment needs to be at $50.
Bottom Line
Overall, AB High Income Fund C ( AGDCX ) has a low Zacks Mutual Fund rank, weak performance, average downside risk, and higher fees compared to its peers.
This could just be the start of your research on AGDCXin the High Yield - Bonds category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.
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Is AGDCX a Strong Bond Fund Right Now?
If you've been stuck searching for High Yield - Bonds funds, you might want to consider passing on by AB High Income Fund C (AGDCX - Free Report) as a possibility. AGDCX bears a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
AGDCX is part of the High Yield - Bonds section, which is a segment that boasts many possible options. Often referred to as " junk " bonds, High Yield - Bonds funds sit below investment grade, meaning they are at a high default risk compared to their investment grade peers. However, one advantage to junk bonds is that they generally pay out higher yields while posing similar interest rate risks to their investment grade counterparts.
History of Fund/Manager
AGDCX is a part of the AllianceBernstein family of funds, a company based out of New York, NY. Since AB High Income Fund C made its debut in February of 1994, AGDCX has garnered more than $733.26 million in assets. The fund's current manager is a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 1.96%, and it sits in the bottom third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 4.25%, which places it in the bottom third during this time-frame.
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 AGDCX over the past three years is 4.39% compared to the category average of 8.28%. The standard deviation of the fund over the past 5 years is 5.14% compared to the category average of 8.68%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
For those that believe interest rates will rise, this is an important factor to consider. AGDCX has a modified duration of 3.77, which suggests that the fund will decline 3.77% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 6.72% means that a $10,000 investment should result in a yearly payout of $672.
If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur if rates are lower in the future when compared to the initial purchase date of the bond.
Since income is just one part of the bond picture, investors need to consider risk relative to broad benchmarks. With a beta of 0.35, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, AGDCX has a positive alpha of 0.65, 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, AGDCX 's junk bond component-bonds rated 'BB' or below-is at 61.41%. This means that the fund has an average quality of BBB, and focuses on medium quality securities.
Expenses
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, AGDCX is a no load fund. It has an expense ratio of 1.59% compared to the category average of 1.02%. Looking at the fund from a cost perspective, AGDCX is actually more expensive than its peers.
Investors should also note that the minimum initial investment for the product is $2,500 and that each subsequent investment needs to be at $50.
Bottom Line
Overall, AB High Income Fund C ( AGDCX ) has a low Zacks Mutual Fund rank, weak performance, average downside risk, and higher fees compared to its peers.
This could just be the start of your research on AGDCXin the High Yield - Bonds category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.