Is BHYAX a Strong Bond Fund Right Now?

High Yield - Bonds fund seekers should consider taking a look at BlackRock (NYSE:BLK) High Yield Bond A (BHYAX). BHYAX holds 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 classified in the High Yield - Bonds segment by Zacks, an area full of investment possibilities. High Yield - Bonds funds come in below investment grade, and are referred to as " junk " bonds for this reason. Compared to their investment grade peers, these funds are at a higher default risk, but typically pay out higher yields while posing similar interest rate risks.

History of Fund/Manager

BHYAX is a part of the BlackRock family of funds, a company based out of New York, NY. Since BlackRock High Yield Bond A made its debut in November of 1998, BHYAX has garnered more than $1.30 billion in assets. A team of investment professionals is the fund's current manager.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 4.37%, and is 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 4.72%, 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. BHYAX's standard deviation over the past three years is 4.47% compared to the category average of 8.98%. The fund's standard deviation over the past 5 years is 5.02% compared to the category average of 9.03%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.24, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, BHYAX has a positive alpha of 3.35, 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 93.24%. This means that the fund has an average quality of BBB, and focuses on medium quality securities.

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, BHYAX is a load fund. It has an expense ratio of 0.92% compared to the category average of 1.02%. BHYAX is actually cheaper than its peers when you consider factors like cost.

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.

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.

For additional information on the High Yield - 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 BHYAX too for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Get Your Free (BHYAX): Fund Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research