Is GHYAX a Strong Bond Fund Right Now?

If you have been looking for Muni - Bonds funds, a place to start could be Goldman Sachs High Yield Municipals A (GHYAX). GHYAX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

GHYAX is one of many Muni - Bonds funds to choose from. Muni - Bonds funds invest in debt securities issued by states and local municipalities, which are typically used to pay for infrastructure construction, schools, and other government functions. These securities can be backed by taxes (revenue bonds), but others are known as " general obligation " and are not necessarily backed by a defined source. These bonds are especially attractive because of their inherent tax benefits.

History of Fund/Manager

Goldman Sachs is based in New York, NY, and is the manager of GHYAX. Since Goldman Sachs High Yield Municipals A made its debut in April of 2000, GHYAX has garnered more than $439.16 million in assets. The fund is currently managed by a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. GHYAX has a 5-year annualized total return of 2.22% and it sits in the top 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 1.83%, 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. The standard deviation of GHYAX over the past three years is 9.26% compared to the category average of 12.88%. The standard deviation of the fund over the past 5 years is 8.29% compared to the category average of 12.48%. This makes the fund less volatile than its peers over the past half-decade.

GHYAX carries a beta of 0.88, 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 2.45, 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, GHYAX has 26.58% in medium quality bonds, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 15.59%, giving GHYAX an average quality of BBB. This means that it focuses on medium quality securities.

However, it is worth noting that 45 % of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.

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, GHYAX is a load fund. It has an expense ratio of 0.85% compared to the category average of 0.93%. From a cost perspective, GHYAX is actually cheaper than its peers.

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 considiration. Returns would be less if those were included.

Bottom Line

Overall, Goldman Sachs High Yield Municipals A ( GHYAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on the Muni - 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 GHYAX too 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.

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This article originally published on Zacks Investment Research (zacks.com).

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