Back to top

Image: Bigstock

Is USHYX a Strong Bond Fund Right Now?

Read MoreHide Full Article

There are plenty of choices in the High Yield - Bonds category, but where should you start your research? Well, one fund that may not be worth investigating is USAA High Income (USHYX - Free Report) . USHYX possesses a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

USHYX is classified in the High Yield - Bonds segment by Zacks, an area full of investment possibilities. High Yield - Bonds funds come in below investment grade, and are referred to as " junk " bonds for this reason. Compared to their investment grade peers, these funds are at a higher default risk, but typically pay out higher yields while posing similar interest rate risks.

History of Fund/Manager

USAA Group is based in San Antonio, TX, and is the manager of USHYX. Since USAA High Income made its debut in August of 1999, USHYX has garnered more than $972.52 million in assets. The fund is currently managed by a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 1.41%, and it sits 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 -0.51%, which places it in the bottom 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, USHYX's standard deviation comes in at 10.15%, compared to the category average of 11.57%. The standard deviation of the fund over the past 5 years is 8.99% 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 0.58, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, USHYX has a negative alpha of -0.56, which measures performance on a risk-adjusted basis.

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, USHYX is a no load fund. It has an expense ratio of 0.82% compared to the category average of 1.02%. Looking at the fund from a cost perspective, USHYX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $3,000 and that each subsequent investment needs to be at $50.

Bottom Line

Overall, USAA High Income ( USHYX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, USAA High Income ( USHYX ) looks like 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 USHYX too for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


USAA HIGH INCOME FUND (USHYX) - free report >>

Published in