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Any investors hoping to find a Muni - Bonds fund could think about starting with Goldman Sachs High Yield Municipals A (GHYAX - Free Report) . GHYAX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes GHYAX 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
Goldman Sachs is based in New York, NY, and is the manager of GHYAX. The Goldman Sachs High Yield Municipals A made its debut in April of 2000 and GHYAX has managed to accumulate roughly $377.94 million in assets, as of the most recently available information. The fund's current manager, Ben Barber, has been in charge of the fund since April of 2000.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. GHYAX has a 5-year annualized total return of 6.16% and is 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 8.05%, 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. Compared to the category average of -29.05%, the standard deviation of GHYAX over the past three years is 2.7%. Looking at the past 5 years, the fund's standard deviation is 3.46% 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, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
If you believe interest rates will rise, this is an important factor to look at. GHYAX has a modified duration of 6.47, which suggests that the fund will decline 6.47% for every hundred-basis-point increase in interest rates.
Income
Since income is, of course, a big reason for purchasing a fixed income security, it is always important to consider the fund's average coupon. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 4.97% means that a $10,000 investment should result in a yearly payout of $497.
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.
Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks. This fund has a beta of 0.69, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, GHYAX has a positive alpha of 2.67, which measures performance on a risk-adjusted basis.
Ratings
However, it is worth noting that 22 % of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.
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, GHYAX is a load fund. It has an expense ratio of 0.85% compared to the category average of 0.58%. GHYAX is actually more expensive than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $50.
Bottom Line
Overall, Goldman Sachs High Yield Municipals A ( GHYAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, this fund looks like a good potential choice for investors right now.
Your research on the Muni - Bonds segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.
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Is GHYAX a Strong Bond Fund Right Now?
Any investors hoping to find a Muni - Bonds fund could think about starting with Goldman Sachs High Yield Municipals A (GHYAX - Free Report) . GHYAX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes GHYAX 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
Goldman Sachs is based in New York, NY, and is the manager of GHYAX. The Goldman Sachs High Yield Municipals A made its debut in April of 2000 and GHYAX has managed to accumulate roughly $377.94 million in assets, as of the most recently available information. The fund's current manager, Ben Barber, has been in charge of the fund since April of 2000.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. GHYAX has a 5-year annualized total return of 6.16% and is 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 8.05%, 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. Compared to the category average of -29.05%, the standard deviation of GHYAX over the past three years is 2.7%. Looking at the past 5 years, the fund's standard deviation is 3.46% 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, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
If you believe interest rates will rise, this is an important factor to look at. GHYAX has a modified duration of 6.47, which suggests that the fund will decline 6.47% for every hundred-basis-point increase in interest rates.
Income
Since income is, of course, a big reason for purchasing a fixed income security, it is always important to consider the fund's average coupon. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 4.97% means that a $10,000 investment should result in a yearly payout of $497.
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.
Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks. This fund has a beta of 0.69, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, GHYAX has a positive alpha of 2.67, which measures performance on a risk-adjusted basis.
Ratings
However, it is worth noting that 22 % of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.
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, GHYAX is a load fund. It has an expense ratio of 0.85% compared to the category average of 0.58%. GHYAX is actually more expensive than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $50.
Bottom Line
Overall, Goldman Sachs High Yield Municipals A ( GHYAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, this fund looks like a good potential choice for investors right now.
Your research on the Muni - Bonds segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.