Is MMHYX a Strong Bond Fund Right Now?
Any investors hoping to find a Muni - Bonds fund could think about starting with MFS Municipals High Income Fund A (MMHYX). MMHYX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.
Objective
We classify MMHYX in the Muni - Bonds category, an area rife with potential choices. Muni - Bonds funds focus their investments on debt securities issued by state and local governments. These are typically used to pay for the construction of infrastructure, the operation of public schools, and other municipal functions. These securities can come in the form of revenue bonds, which are backed by taxes, as well as " general obligation " bonds that are not backed by a defined source. Investors are usually interested that come with most municipal bonds, which can be especially important for those in higher tax brackets.
History of Fund/Manager
MMHYX is a part of the MFS family of funds, a company based out of Boston, MA. Since MFS Municipals High Income Fund A made its debut in February of 1984, MMHYX has garnered more than $1.57 billion in assets. The fund's current manager is a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. MMHYX has a 5-year annualized total return of 0.98% and is in the bottom 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 -1.92%, which places it in the bottom third during this time-frame.
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. Over the past three years, MMHYX's standard deviation comes in at 8.94%, compared to the category average of 13.14%. Over the past 5 years, the standard deviation of the fund is 8.74% compared to the category average of 13.92%. This makes the fund less volatile than its peers over the past half-decade.
With a beta of 0.98, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, MMHYX has a positive alpha of 0.09, 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, MMHYX has 35.96% in medium quality bonds, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 20.33%, giving MMHYX an average quality of BBB. This means that it focuses on medium quality securities.
However, it is worth noting that 37 % of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, MMHYX is a load fund. It has an expense ratio of 0.60% compared to the category average of 0.94%. From a cost perspective, MMHYX is actually cheaper than its peers.
This fund requires a minimum initial investment of $1,000, and each subsequent investment should be at least $50.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, MFS Municipals High Income Fund A ( MMHYX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and lower fees, MFS Municipals High Income Fund A ( MMHYX ) looks like a somewhat average choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Muni - 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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