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Is BCHYX a Strong Bond Fund Right Now?

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If investors are looking at the Muni - Bonds fund category, American Century CA High Yield Municipals Investor (BCHYX - Free Report) could be a potential option. BCHYX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

BCHYX is one of many Muni - Bonds funds to choose from. Muni - Bonds funds invest in debt securities issued by states and local municipalities, which are typically used to pay for infrastructure construction, schools, and other government functions. These securities can be backed by taxes (revenue bonds), but others are known as " general obligation " and are not necessarily backed by a defined source. These bonds are especially attractive because of their inherent tax benefits.

History of Fund/Manager

BCHYX finds itself in the American Century family, based out of Kansas City, MO. The American Century CA High Yield Municipals Investor made its debut in December of 1986 and BCHYX has managed to accumulate roughly $914.70 million in assets, as of the most recently available information. A team of investment professionals is the fund's current manager.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 3.73%, and is in the top 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 5.48%, 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. Over the past three years, BCHYX's standard deviation comes in at 6.17%, compared to the category average of 12.54%. The standard deviation of the fund over the past 5 years is 5.63% compared to the category average of 10.55%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.75, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, BCHYX has a negative alpha of -0.25, which measures performance on a risk-adjusted basis.

Ratings

However, it is worth noting that 49 % 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, BCHYX is a no load fund. It has an expense ratio of 0.49% compared to the category average of 0.79%. From a cost perspective, BCHYX is actually cheaper than its peers.

This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $50.

Bottom Line

Overall, American Century CA High Yield Municipals Investor ( BCHYX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, American Century CA High Yield Municipals Investor ( BCHYX ) 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. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.


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