If you've been stuck searching for Muni - Bonds funds, consider American Century High Yield Municipals Investor (ABHYX Quick QuoteABHYX - Free Report) as a possibility. ABHYX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes ABHYX as Muni - Bonds, which is a segment packed with options. Muni - Bonds funds invest in debt securities issued by states or local municipalities. These are generally used to finance construction of infrastructure, pay for schools, or other government functions. Some are backed by taxes (revenue bonds), while others are " general obligation " and may not be backed by a defined source. Investors usually appreciate the tax benefits that come with many municipal bonds, which are especially impressive for those in high 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 $311.30 million, according to the most recently available information. The fund is currently managed by a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. ABHYX has a 5-year annualized total return of 5.11% and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 6.68%, which places it in the top 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. ABHYX's standard deviation over the past three years is 2.51% compared to the category average of -19.77%. The standard deviation of the fund over the past 5 years is 3.56% compared to the category average of -3.21%. This makes the fund more volatile than its peers over the past half-decade.

Bond Duration

Modified duration is a measure of a given bond's interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.

For investors who think interest rates will rise, this is an important factor to consider. ABHYX has a modified duration of 7.88, which suggests that the fund will decline 7.88% for every hundred-basis-point increase in interest rates.

Income

It is important to consider the fund's average coupon because income is often a big reason for purchasing a fixed income security. A fund's average coupon is simply its average payout in a given year. For example, this fund's average coupon of 5.01% means that a $10,000 investment should result in a yearly payout of $501.

While a higher coupon is good for when you want a strong level of current income, it could present a reinvestment risk 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. This fund has a beta of 0.73, 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 1.24, 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 20.99% in high quality bonds rated at least 'AA' or higher, while 23.79% are of medium quality, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 23.36%, giving ABHYX an average quality of BBB. This means that it focuses on medium quality securities.

However, it is worth noting that 31 % of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, ABHYX is a no load fund. It has an expense ratio of 0.60% compared to the category average of 1.90%. ABHYX is actually cheaper than its peers when you consider factors like cost.

While the minimum initial investment for the product is $5,000, investors should also note that each subsequent investment needs to be at least $50.

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, worse downside risk, and lower fees, American Century High Yield Municipals Investor ( ABHYX ) looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Muni - Bonds, make sure to go to www.zacks.com/funds/mutual-funds 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.