There are plenty of choices in the High Yield - Bonds category, but where should you start your research? Well, one fund that might be worth investigating is Principal High Yield A (CPHYX). CPHYX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
We note that CPHYX 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.
CPHYX finds itself in the Principal Financial Group family, based out of Des Moines, IA. Principal High Yield A debuted in April of 1998. Since then, CPHYX has accumulated assets of about $419.77 million, according to the most recently available information. The fund's current manager is a team of investment professionals.
Investors naturally seek funds with strong performance. CPHYX has a 5-year annualized total return of 4.55% and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 3.39%, which places it in the top 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. Compared to the category average of 12.52%, the standard deviation of CPHYX over the past three years is 7.73%. The fund's standard deviation over the past 5 years is 8.55% compared to the category average of 13.61%. This makes the fund less volatile than its peers over the past half-decade.
With a beta of 0.19, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, CPHYX has a positive alpha of 4.5, 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, CPHYX is a load fund. It has an expense ratio of 0.92% compared to the category average of 0.94%. So, CPHYX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $100
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Overall, Principal High Yield A ( CPHYX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
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