If you've been stuck searching for Muni - Bonds funds, you might want to consider passing on by BNY Mellon High Yield Muni Bond A (DHYAX Quick QuoteDHYAX - Free Report) as a possibility. DHYAX possesses a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on various forecasting factors like size, cost, and past performance.

Objective

We classify DHYAX in the Muni - Bonds category, an area rife with potential choices. Muni - Bonds funds focus their investments on debt securities issued by state and local governments. These are typically used to pay for the construction of infrastructure, the operation of public schools, and other municipal functions. These securities can come in the form of revenue bonds, which are backed by taxes, as well as "general obligation" bonds that are not backed by a defined source. Investors are usually interested that come with most municipal bonds, which can be especially important for those in higher tax brackets.

History of Fund/Manager

BNY Mellon is based in New York, NY, and is the manager of DHYAX. Since BNY Mellon High Yield Muni Bond A made its debut in March of 2007, DHYAX has garnered more than $51.42 million in assets. The fund's current manager, Jeffrey Burger, has been in charge of the fund since November of 2011.

Performance

Of course, investors look for strong performance in funds. DHYAX has a 5-year annualized total return of -0.13%, and it sits in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 4.12%, which places it in the bottom 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. DHYAX's standard deviation over the past three years is 8.51% compared to the category average of 10.32%. Over the past 5 years, the standard deviation of the fund is 9.17% compared to the category average of 11.58%. This makes the fund less volatile than its peers over the past half-decade.

Income

We must remember to consider the fund's average coupon, as income is traditionally 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 4.84% means that a $10,000 investment should result in a yearly payout of $484.

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.

DHYAX carries a beta of 0.83, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 0.31, 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, DHYAX has 43.19% in medium quality bonds, with ratings of "A" to "BBB". The fund's junk bond component-bonds rated "BB" or below-is at 19.36%, giving DHYAX an average quality of BBB. This means that it focuses on medium quality securities.

However, it is worth noting that 26% 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, DHYAX is a load fund and it has an expense ratio of 1.08%.

Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $100.

Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.

Bottom Line

With a 'strong sell' rank, BNY Mellon High Yield Muni Bond A is in the bottom 20% of all mutual funds we cover. This means that our models suggest it is one of the worst options for investors in Muni - Bonds right now, though this could change if the performance of the fund and the Zacks Ranks of the equities in DHYAX turnaround in the next data release.

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. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.