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Is GHYAX a Strong Bond Fund Right Now?

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Zacks Equity Research
·3 min read
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If you've been stuck searching for Muni - Bonds funds, consider Goldman Sachs High Yield Municipals A (GHYAX) as a possibility. GHYAX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes GHYAX as Muni - Bonds, which is a segment packed with options. Muni - Bonds funds invest in debt securities issued by states or local municipalities. These are generally used to finance construction of infrastructure, pay for schools, or other government functions. Some are backed by taxes (revenue bonds), while others are " general obligation " and may not be backed by a defined source. Investors usually appreciate the tax benefits that come with many municipal bonds, which are especially impressive for those in high tax brackets.

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 $468.97 million in assets. The fund is currently managed by Scott Diamond who has been in charge of the fund since December of 2002.

Performance

Investors naturally seek funds with strong performance. GHYAX has a 5-year annualized total return of 6.1% and is in the top 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 6.33%, 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. The standard deviation of GHYAX over the past three years is 7.71% compared to the category average of 13.34%. Over the past 5 years, the standard deviation of the fund is 6.57% compared to the category average of 11.36%. This makes the fund less volatile than its peers over the past half-decade.

GHYAX carries a beta of 0.89, 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 0.95, which measures performance on a risk-adjusted basis.

Ratings

However, it is worth noting that 25 % of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.

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, GHYAX is a load fund. It has an expense ratio of 0.86% compared to the category average of 0.83%. Looking at the fund from a cost perspective, GHYAX is actually more expensive than its peers.

This fund requires a minimum initial investment of $1,000, and each subsequent investment should be at least $50.

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 higher fees, this fund looks like a good potential choice for investors right now.

This could just be the start of your research on GHYAXin the Muni - Bonds 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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