We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
If you have been looking for High Yield - Bonds funds, it would not be wise to start your search with Federated Institutional High Yield Bond (FIHBX - Free Report) . FIHBX carries a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
FIHBX 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
FIHBX finds itself in the Federated family, based out of Pittsburgh, PA. Since Federated Institutional High Yield Bond made its debut in November of 2002, FIHBX has garnered more than $5.31 billion in assets. The fund is currently managed by a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 5.12%, and is 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 8.98%, 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. Compared to the category average of 11.58%, the standard deviation of FIHBX over the past three years is 6.85%. Over the past 5 years, the standard deviation of the fund is 7.09% compared to the category average of 11.08%. 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 investors who think interest rates will rise, this is an important factor to consider. FIHBX has a modified duration of 3.1, which suggests that the fund will decline 3.1% 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. This metric takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 6.09% means that a $10,000 investment should result in a yearly payout of $609.
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.
Investors also need to consider risk relative to broad benchmarks, as income is only one part of the bond picture. This fund has a beta of 0.31, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, FIHBX has a positive alpha of 5.38, which measures performance on a risk-adjusted basis.
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, FIHBX is a no load fund. It has an expense ratio of 0.49% compared to the category average of 0.92%. Looking at the fund from a cost perspective, FIHBX is actually cheaper than its peers.
While the minimum initial investment for the product is $1 million, investors should also note that there is no minimum for each subsequent investment.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, even with its comparatively weak performance, average downside risk, and lower fees, Federated Institutional High Yield Bond ( FIHBX ) has a low Zacks Mutual Fund rank, and therefore looks a somewhat weak choice for investors right now.
For additional information on the High Yield - Bonds area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into FIHBX too 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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is FIHBX a Strong Bond Fund Right Now?
If you have been looking for High Yield - Bonds funds, it would not be wise to start your search with Federated Institutional High Yield Bond (FIHBX - Free Report) . FIHBX carries a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
FIHBX 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
FIHBX finds itself in the Federated family, based out of Pittsburgh, PA. Since Federated Institutional High Yield Bond made its debut in November of 2002, FIHBX has garnered more than $5.31 billion in assets. The fund is currently managed by a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 5.12%, and is 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 8.98%, 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. Compared to the category average of 11.58%, the standard deviation of FIHBX over the past three years is 6.85%. Over the past 5 years, the standard deviation of the fund is 7.09% compared to the category average of 11.08%. 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 investors who think interest rates will rise, this is an important factor to consider. FIHBX has a modified duration of 3.1, which suggests that the fund will decline 3.1% 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. This metric takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 6.09% means that a $10,000 investment should result in a yearly payout of $609.
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.
Investors also need to consider risk relative to broad benchmarks, as income is only one part of the bond picture. This fund has a beta of 0.31, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, FIHBX has a positive alpha of 5.38, which measures performance on a risk-adjusted basis.
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, FIHBX is a no load fund. It has an expense ratio of 0.49% compared to the category average of 0.92%. Looking at the fund from a cost perspective, FIHBX is actually cheaper than its peers.
While the minimum initial investment for the product is $1 million, investors should also note that there is no minimum for each subsequent investment.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, even with its comparatively weak performance, average downside risk, and lower fees, Federated Institutional High Yield Bond ( FIHBX ) has a low Zacks Mutual Fund rank, and therefore looks a somewhat weak choice for investors right now.
For additional information on the High Yield - Bonds area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into FIHBX too 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.