Is STYAX a Strong Bond Fund Right Now?

If investors are looking at the Government Mortgage - Intermediate fund category, make sure to pass over Wells Fargo Core Plus Bond A (STYAX). STYAX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

STYAX is one of many Government Mortgage - Intermediate funds to choose from. Government Mortgage - Intermediate funds focus on the mortgage-backed securities (MBS) market. This market takes mortgages, packages them together, and sells off the pooled securities to investors. This particular category focuses on MBS that usually have at least three years to maturity, but less than 10, giving a medium risk and yield profile to funds here.

History of Fund/Manager

Wells Fargo is based in San Francisco, CA, and is the manager of STYAX. Wells Fargo Core Plus Bond A made its debut in July of 1998, and since then, STYAX has accumulated about $249.67 million in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. STYAX has a 5-year annualized total return of 4.55% and it sits 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 4.91%, which places it in the middle 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. STYAX's standard deviation over the past three years is 3.98% compared to the category average of 10.87%. Looking at the past 5 years, the fund's standard deviation is 3.78% compared to the category average of 9.96%. This makes the fund less volatile than its peers over the past half-decade.

STYAX carries a beta of 1.03, meaning that the fund is more volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 0.64, 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, STYAX has 57.07% in high quality bonds rated at least 'AA' or higher, while 31.94% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of AA, and focuses on high quality securities.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, STYAX is a load fund. It has an expense ratio of 0.91% compared to the category average of 0.79%. STYAX is actually more expensive than its peers when you consider factors like cost.

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.

Bottom Line

Overall, Wells Fargo Core Plus Bond A ( STYAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and higher fees, Wells Fargo Core Plus Bond A ( STYAX ) looks like a poor potential choice for investors right now.

For additional information on the Government Mortgage - Intermediate area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into STYAX too 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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