Is BHYIX a Strong Bond Fund Right Now?
If you've been stuck searching for High Yield - Bonds funds, consider BlackRock High Yield Bond Institutional (BHYIX) as a possibility. BHYIX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
BHYIX 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
BlackRock is responsible for BHYIX, and the company is based out of New York, NY. BlackRock High Yield Bond Institutional debuted in November of 1998. Since then, BHYIX has accumulated assets of about $13.33 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.
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 7.53%, and it sits 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 5.6%, 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. BHYIX's standard deviation over the past three years is 9.76% compared to the category average of 13.99%. Looking at the past 5 years, the fund's standard deviation is 7.89% compared to the category average of 11.85%. This makes the fund less volatile than its peers over the past half-decade.
This fund has a beta of 0.58, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, BHYIX has a positive alpha of 4.99, 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, BHYIX '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
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, BHYIX is a no load fund. It has an expense ratio of 0.58% compared to the category average of 1.01%. BHYIX is actually cheaper than its peers when you consider factors like cost.
While the minimum initial investment for the product is $2 million, investors should also note that there is no minimum for each subsequent investment.
Bottom Line
Overall, BlackRock High Yield Bond Institutional ( BHYIX ) 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.
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