Is GAMDX a Strong Bond Fund Right Now?

Any investors hoping to find a International Bond - Emerging fund might consider looking past Goldman Sachs Local Emerging Markets Debt A (GAMDX). GAMDX possesses a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on various forecasting factors like size, cost, and past performance.

Objective

GAMDX is part of the International Bond - Emerging section, a segment that boasts an impressive array of other possible selections. International Bond - Emerging funds offer a unique type of geographic diversification by focusing on fixed income securities from emerging nations around the globe. With these funds, investors can expect exposure to economies such as China, Brazil, India, South Africa, and Indonesia, just to name a few. While this can be appealing, these funds can also introduce currency risk.

History of Fund/Manager

Goldman Sachs is responsible for GAMDX, and the company is based out of New York, NY. Goldman Sachs Local Emerging Markets Debt A made its debut in February of 2008, and since then, GAMDX has accumulated about $3.01 million in assets, per the most up-to-date date available. The fund is currently managed by Nicholas Saunders who has been in charge of the fund since October of 2023.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. GAMDX has a 5-year annualized total return of 2.34%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 6.8%, 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. GAMDX's standard deviation over the past three years is 5.11% compared to the category average of 10.11%. Looking at the past 5 years, the fund's standard deviation is 7.98% compared to the category average of 12.02%. 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, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.

For those that believe interest rates will rise, this is an important factor to consider. GAMDX has a modified duration of 3.95, which suggests that the fund will decline 3.95% 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. A fund's average coupon is simply its average payout in a given year. For example, this fund's average coupon of 6.28% means that a $10,000 investment should result in a yearly payout of $628.

A higher coupon is good for those seeking a strong level of current income, but it could also pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond. Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks.

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, GAMDX is a load fund. It has an expense ratio of 1.14% compared to the category average of 0.93%. So, GAMDX is actually more expensive than its peers from a cost perspective.

Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $50.

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

Bottom Line

Overall, Goldman Sachs Local Emerging Markets Debt A ( GAMDX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and higher fees, Goldman Sachs Local Emerging Markets Debt A ( GAMDX ) looks like a somewhat weak choice for investors right now.

This could just be the start of your research on GAMDX in the International Bond - Emerging category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.

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