Is OIBYX a Strong Bond Fund Right Now?
If investors are looking at the International Bond - Developed fund category, make sure to pass over Oppenheimer International Bond Y (OIBYX). OIBYX holds a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
OIBYX is one of many International Bond - Developed funds to choose from. International Bond - Developed funds offer investors geographic diversification by focusing on fixed income securities from developed nations besides the United States. Top holdings include assets from countries like Japan, Germany, the UK, France, and Australia. While these is certainly an advantage, investors should be aware of currency risk.
History of Fund/Manager
Invesco is based in Kansas City, MO, and is the manager of OIBYX. Oppenheimer International Bond Y made its debut in October of 2004, and since then, OIBYX has accumulated about $1.15 billion in assets, per the most up-to-date date available. The fund's current manager is a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 5.73%, 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 3.77%, which places it in the middle 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. Over the past three years, OIBYX's standard deviation comes in at 12.54%, compared to the category average of 13.18%. The fund's standard deviation over the past 5 years is 10.26% compared to the category average of 11.38%. This makes the fund less volatile than its peers over the past half-decade.
This fund has a beta of 0.51, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, OIBYX has a positive alpha of 2.46, 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, OIBYX has 24.55% in high quality bonds rated at least 'AA' or higher, while 40.37% are of medium quality, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 27.33%, giving OIBYX an average quality of BBB. This means that it 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, OIBYX is a no load fund. It has an expense ratio of 0.76% compared to the category average of 0.96%. From a cost perspective, OIBYX is actually cheaper 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 $50.
Bottom Line
Overall, Oppenheimer International Bond Y ( OIBYX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
For additional information on the International Bond - Developed 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 OIBYX too for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.
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