If you have been looking for Muni - Bonds funds, a place to start could be American Century High Yield Municipals Investor (ABHYX Quick QuoteABHYX - Free Report) . ABHYX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

We classify ABHYX 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

ABHYX is a part of the American Century family of funds, a company 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 $219.07 million, according to the most recently available information. Joseph Gotelli is the fund's current manager and has held that role since January of 2012.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 0.92%, and is in the middle 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 4.9%, 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. ABHYX's standard deviation over the past three years is 6.57% compared to the category average of 9.94%. The standard deviation of the fund over the past 5 years is 7.45% compared to the category average of 11.6%. 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. ABHYX has a modified duration of 8.22, which suggests that the fund will decline 8.22% for every hundred-basis-point increase in interest rates.

This fund has a beta of 0.78, 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 0.52, 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 28.2% in medium quality bonds, with ratings of "A" to "BBB". The fund's junk bond component-bonds rated "BB" or below-is at 13.5%, giving ABHYX an average quality of BBB. This means that it focuses on medium quality securities.

However, it is worth noting that 43% 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, ABHYX is a no load fund. It has an expense ratio of 0.60% compared to the category average of 0.91%. So, ABHYX is actually cheaper than its peers from a cost perspective.

Investors should also note that the minimum initial investment for the product is $2,500 and that each subsequent investment needs to be at $50.

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

Bottom Line

Overall, American Century High Yield Municipals Investor ( ABHYX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

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