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Is BHYAX a Strong Bond Fund Right Now?

Zacks Equity Research
·4 min read

If you've been stuck searching for High Yield - Bonds funds, consider BlackRock High Yield Bond A (BHYAX) as a possibility. BHYAX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

BHYAX 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

BHYAX finds itself in the BlackRock family, based out of New York, NY. Since BlackRock High Yield Bond A made its debut in November of 1998, BHYAX has garnered more than $1.32 billion in assets. The fund is currently managed by a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 5.08%, and it sits 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 4.15%, which places it in the top 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, BHYAX's standard deviation comes in at 9.51%, compared to the category average of 13.18%. The standard deviation of the fund over the past 5 years is 8.1% compared to the category average of 11.49%. This makes the fund less volatile than its peers over the past half-decade.

With a beta of 0.71, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, BHYAX has a positive alpha of 2.81, 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, BHYAX 's junk bond component-bonds rated 'BB' or below-is at 83.92%. This means that the fund has an average quality of BBB, and focuses on medium quality securities.

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, BHYAX is a load fund. It has an expense ratio of 0.91% compared to the category average of 1.01%. BHYAX is actually cheaper 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.

Bottom Line

Overall, BlackRock High Yield Bond A ( BHYAX ) 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.

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. 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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Zacks Investment Research