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High Yield - Bonds fund seekers should consider taking a look at Fidelity High Income (SPHIX - Free Report) . SPHIX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
SPHIX 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
Fidelity is responsible for SPHIX, and the company is based out of Boston, MA. Since Fidelity High Income made its debut in August of 1990, SPHIX has garnered more than $2.64 billion in assets. The fund's current manager, Benjamin Harrison, has been in charge of the fund since January of 2022.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 4.31%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 9.83%, which places it in the top 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 9.75%, the standard deviation of SPHIX over the past three years is 4.5%. The fund's standard deviation over the past 5 years is 7.04% compared to the category average of 11.59%. This makes the fund less 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.
For those that believe interest rates will rise, this is an important factor to consider. SPHIX has a modified duration of 2.71, which suggests that the fund will decline 2.71% for every hundred-basis-point increase in interest rates.
Income
Income is often a big reason for purchasing a fixed income security, so it is 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 6.71% means that a $10,000 investment should result in a yearly payout of $671.
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. 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 0.47, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, SPHIX has a positive alpha of 3.36, 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, SPHIX is a no load fund. It has an expense ratio of 0.66% compared to the category average of 0.92%. SPHIX is actually cheaper than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, Fidelity High Income ( SPHIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity High Income ( SPHIX ) looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the High Yield - Bonds, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
View the Zacks #1 Rank List
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Is SPHIX a Strong Bond Fund Right Now?
High Yield - Bonds fund seekers should consider taking a look at Fidelity High Income (SPHIX - Free Report) . SPHIX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
SPHIX 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
Fidelity is responsible for SPHIX, and the company is based out of Boston, MA. Since Fidelity High Income made its debut in August of 1990, SPHIX has garnered more than $2.64 billion in assets. The fund's current manager, Benjamin Harrison, has been in charge of the fund since January of 2022.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 4.31%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 9.83%, which places it in the top 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 9.75%, the standard deviation of SPHIX over the past three years is 4.5%. The fund's standard deviation over the past 5 years is 7.04% compared to the category average of 11.59%. This makes the fund less 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.
For those that believe interest rates will rise, this is an important factor to consider. SPHIX has a modified duration of 2.71, which suggests that the fund will decline 2.71% for every hundred-basis-point increase in interest rates.
Income
Income is often a big reason for purchasing a fixed income security, so it is 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 6.71% means that a $10,000 investment should result in a yearly payout of $671.
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. 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 0.47, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, SPHIX has a positive alpha of 3.36, 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, SPHIX is a no load fund. It has an expense ratio of 0.66% compared to the category average of 0.92%. SPHIX is actually cheaper than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, Fidelity High Income ( SPHIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity High Income ( SPHIX ) looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the High Yield - Bonds, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.