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Is STYAX a Strong Bond Fund Right Now?

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Zacks Equity Research
·4 min read
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If you've been stuck searching for Government Mortgage - Intermediate funds, consider Wells Fargo Core Plus Bond A (STYAX) as a possibility. STYAX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify STYAX in the Government Mortgage - Intermediate category, an area full of potential choices. Government Mortgage - Intermediate funds focus on the mortgage-backed securities (MBS) market, which packages mortgages together and then sells off the pooled securities as a MBS. Honing in on MBS'that have at least three years to maturity but less than 10, this fund category presents a medium risk and yield profile.

History of Fund/Manager

Wells Fargo is based in San Francisco, CA, and is the manager of STYAX. Wells Fargo Core Plus Bond A made its debut in July of 1998, and since then, STYAX has accumulated about $263.88 million in assets, per the most up-to-date date available. The fund's current manager is a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 5.83%, 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 6.36%, 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. STYAX's standard deviation over the past three years is 4.41% compared to the category average of 12.15%. Over the past 5 years, the standard deviation of the fund is 3.98% compared to the category average of 10.47%. This makes the fund less volatile than its peers over the past half-decade.

STYAX carries a beta of 1.04, meaning that the fund is more volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 1.38, 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, STYAX has 45.73% in high quality bonds rated at least 'AA' or higher, while 32.71% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.

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, STYAX is a load fund. It has an expense ratio of 0.91% compared to the category average of 0.81%. From a cost perspective, STYAX is actually more expensive than its peers.

While the minimum initial investment for the product is $1,000, investors should also note that each subsequent investment needs to be at least $100.

Bottom Line

Overall, Wells Fargo Core Plus Bond A ( STYAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and higher fees, Wells Fargo Core Plus Bond A ( STYAX ) looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Government Mortgage - Intermediate, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.


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