Is VSLAX a Strong Bond Fund Right Now?

Have you been searching for a High Yield - Bonds fund? You might want to begin with Invesco Senior Loan A (VSLAX). VSLAX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.

Objective

VSLAX 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

Invesco is based in Kansas City, MO, and is the manager of VSLAX. The Invesco Senior Loan A made its debut in February of 2005 and VSLAX has managed to accumulate roughly $43.02 million in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. VSLAX has a 5-year annualized total return of 7.39% and it sits 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 7.18%, 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 VSLAX over the past three years is 4.26% compared to the category average of 14.94%. Over the past 5 years, the standard deviation of the fund is 4.39% compared to the category average of 13.71%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of -0.33, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VSLAX has a positive alpha of 5.13, which measures performance on a risk-adjusted basis.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, VSLAX is a load fund. It has an expense ratio of 1.84% compared to the category average of 0.91%. VSLAX is actually more expensive than its peers when you consider factors like cost.

Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $50

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

Bottom Line

Your research on the High Yield - Bonds segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.

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

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