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There are plenty of choices in the High Yield - Bonds category, but where should you start your research? Well, one fund that may not be worth investigating is Fidelity High Income (SPHIX). SPHIX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
We note that SPHIX 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
Fidelity is based in Boston, MA, and is the manager of SPHIX. Since Fidelity High Income made its debut in August of 1990, SPHIX has garnered more than $2.42 billion in assets. A team of investment professionals is the fund's current manager.
Performance
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 2.9%, 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 2.27%, which places it in the middle 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, SPHIX's standard deviation comes in at 8.63%, compared to the category average of 13.17%. Looking at the past 5 years, the fund's standard deviation is 9.24% compared to the category average of 14.21%. This makes the fund less volatile than its peers over the past half-decade.
SPHIX carries a beta of 0.06, 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 3.08, which measures performance on a risk-adjusted basis.
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, SPHIX is a no load fund. It has an expense ratio of 0.69% compared to the category average of 0.95%. SPHIX is actually cheaper than its peers when you consider factors like cost.