Having trouble finding a High Yield – Bonds fund? Fidelity Series Floating Rate Hgh Income (FFHCX) is a potential starting point. FFHCX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
FFHCX 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.
Fidelity is based in Boston, MA, and is the manager of FFHCX. Fidelity Series Floating Rate Hgh Income made its debut in October of 2011, and since then, FFHCX has accumulated about $253.62 million in assets, per the most up-to-date date available. A team of investment professionals is the fund’s current manager.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. FFHCX has a 5-year annualized total return of 7.78% and is 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 8.75%, which places it in the top third during this time-frame.
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It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
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. The standard deviation of FFHCX over the past three years is 3.53% compared to the category average of 3.96%. The fund’s standard deviation over the past 5 years is 3.35% compared to the category average of 3.78%. This makes the fund less volatile than its peers over the past half-decade.
Modified duration is a measure of a specific bond’s interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
For investors who think interest rates will rise, this is an important factor to consider. FFHCX has a modified duration of 0.22, which suggests that the fund will decline 0.22% for every hundred-basis-point increase in interest rates.
We must remember to consider the fund’s average coupon, as income is traditionally 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 7.64% means that a $10,000 investment should result in a yearly payout of $764.
If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur if rates are lower in the future when compared to the initial purchase date of the bond.
Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks. FFHCX carries a beta of -0.14, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 5.6, which measures performance on a risk-adjusted basis.
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, FFHCX is a no load fund. It has an expense ratio of 0.03% compared to the category average of 1.04%. From a cost perspective, FFHCX is actually cheaper than its peers.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Overall, Fidelity Series Floating Rate Hgh Income ( FFHCX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity Series Floating Rate Hgh Income ( FFHCX ) looks like a good potential choice for investors right now.
Don’t stop here for your research on High Yield – Bonds funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare FFHCX to its peers as well for additional information. And don’t forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
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