Is FIHBX a Strong Bond Fund Right Now?
If investors are looking at the High Yield - Bonds fund category, Federated Institutional High Yield Bond (FIHBX) could be a potential option. FIHBX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
We note that FIHBX 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
FIHBX is a part of the Federated family of funds, a company based out of Pittsburgh, PA. Federated Institutional High Yield Bond made its debut in November of 2002, and since then, FIHBX has accumulated about $5.72 billion in assets, per the most up-to-date date available. The fund is currently managed by Mark E. Durbiano who has been in charge of the fund since November of 2002.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. FIHBX has a 5-year annualized total return of 4.74% and is 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 3.13%, 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 10.55%, the standard deviation of FIHBX over the past three years is 8.45%. Looking at the past 5 years, the fund's standard deviation is 7.47% compared to the category average of 9.56%. This makes the fund less volatile than its peers over the past half-decade.
FIHBX carries a beta of 0.47, 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 2.54, 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, FIHBX is a no load fund. It has an expense ratio of 0.49% compared to the category average of 1.02%. FIHBX is actually cheaper than its peers when you consider factors like cost.
Investors should also note that the minimum initial investment for the product is $1 million and that each subsequent investment has no minimum amount.
Overall, Federated Institutional High Yield Bond ( FIHBX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Federated Institutional High Yield Bond ( FIHBX ) looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the High Yield - Bonds, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.
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