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On the lookout for a High Yield - Bonds fund? Starting with USAA High Income (USHYX) is one possibility. USHYX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We note that USHYX is a High Yield - Bonds option, which is an area loaded with different investment choices. High Yield - Bonds funds are often known as " junk " bonds since they are below investment grade. This means they are at an elevated risk of default, at least when compared to their investment grade peers. On the plus side, junk bonds generally pay out higher yields, all while posing similar interest rate risks as we see with their investment grade counterparts.
History of Fund/Manager
USAA Group is based in San Antonio, TX, and is the manager of USHYX. USAA High Income debuted in August of 1999. Since then, USHYX has accumulated assets of about $1.21 billion, according to the most recently available information. The fund's current manager is a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. USHYX has a 5-year annualized total return of 3.94% 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 6.04%, 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. USHYX's standard deviation over the past three years is 5.36% compared to the category average of 7.1%. The fund's standard deviation over the past 5 years is 4.96% compared to the category average of 7.23%. 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 investors who think interest rates will rise, this is an important factor to consider. USHYX has a modified duration of 3.61, which suggests that the fund will decline 3.61% for every hundred-basis-point increase in interest rates.
Income
It is important to consider the fund's average coupon because income is often a big reason for purchasing a fixed income security. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 6.26% means that a $10,000 investment should result in a yearly payout of $626.