Is GHYAX A Strong Bond Fund Right Now?

On the lookout for a Muni - Bonds fund? Starting with Goldman Sachs (NYSE:GS) High Yield Municipals A GHYAX is one possibility. GHYAX bears 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 GHYAX in the Muni - Bonds category, an area rife with potential choices. Muni - Bonds funds focus their investments on debt securities issued by state and local governments. These are typically used to pay for the construction of infrastructure, the operation of public schools, and other municipal functions. These securities can come in the form of revenue bonds, which are backed by taxes, as well as " general obligation " bonds that are not backed by a defined source. Investors are usually interested that come with most municipal bonds, which can be especially important for those in higher tax brackets.

History of Fund/Manager

GHYAX is a part of the Goldman Sachs family of funds, a company based out of New York, NY. Since Goldman Sachs High Yield Municipals A made its debut in April of 2000, GHYAX has garnered more than $237.06 million in assets. The fund is currently managed by Ben Barber who has been in charge of the fund since April of 2000.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 4.42%, and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 5.43%, 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. Compared to the category average of 7.29%, the standard deviation of GHYAX over the past three years is 3.87%. The fund's standard deviation over the past 5 years is 5.21% compared to the category average of 7.37%. This makes the fund less volatile than its peers over the past half-decade.

Bond Duration

Modified duration is a measure of a given bond's interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.

For those that believe interest rates will rise, this is an important factor to consider. GHYAX has a modified duration of 6.77, which suggests that the fund will decline 6.77% for every hundred-basis-point increase in interest rates.

This fund has a beta of 1.25, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, GHYAX has a positive alpha of 1.5, which measures performance on a risk-adjusted basis.

Ratings

However, it is worth noting that 22 % of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.

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, GHYAX is a load fund. It has an expense ratio of 0.85% compared to the category average of 0.88%. Looking at the fund from a cost perspective, GHYAX is actually cheaper than its peers.

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, Goldman Sachs High Yield Municipals A has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Goldman Sachs High Yield Municipals A looks like a good potential choice for investors right now.

Want even more information about GHYAX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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.