Having trouble finding an International Bond – Developed fund? Invesco International Bond Y (OIBYX) is a possible starting point. OIBYX holds a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.
OIBYX is one of many International Bond – Developed funds to choose from. International Bond – Developed funds offer investors geographic diversification by focusing on fixed income securities from developed nations besides the United States. Top holdings include assets from countries like Japan, Germany, the UK, France, and Australia. While these is certainly an advantage, investors should be aware of currency risk.
Invesco is based in Kansas City, MO, and is the manager of OIBYX. The Invesco International Bond Y made its debut in October of 2004 and OIBYX has managed to accumulate roughly $462.80 million in assets, as of the most recently available information. A team of investment professionals is the fund’s current manager.
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 1.68%, and it sits in the top third among its category peers. If you’re interested in shorter time frames, do not dismiss looking at the fund’s 3 -year annualized total return of 5.17%, 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. The standard deviation of OIBYX over the past three years is 10.55% compared to the category average of 12.81%. Looking at the past 5 years, the fund’s standard deviation is 10.12% compared to the category average of 12.43%. This makes the fund less volatile than its peers over the past half-decade.
Modified duration is a measure of a given bond’s interest rate sensitivity, and is a metric that’s a good way to judge how fixed income securities will respond in a shifting rate environment.
If you believe interest rates will rise, this is an important factor to look at. OIBYX has a modified duration of 3.69, which suggests that the fund will decline 3.69% for every hundred-basis-point increase in interest rates.
It is important to consider the fund’s average coupon because income is often a big reason for purchasing a fixed income security. Average coupon is a look at the average payout by the fund in a given year. For example, this fund’s average coupon of 6.1% means that a $10,000 investment should result in a yearly payout of $610.
While a higher coupon is good for when you want a strong level of current income, it could present a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks. This fund has a beta of 0.24, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, OIBYX has a positive alpha of 3.41, which measures performance on a risk-adjusted basis.
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, OIBYX has 41.58% in high quality bonds rated at least ‘AA’ or higher, while its junk bond component-bonds rated ‘BB’ or below-is at 30.11%. This means that the fund has an average quality of A, and focuses on high quality securities.
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, OIBYX is a no load fund. It has an expense ratio of 0.79% compared to the category average of 0.93%. So, OIBYX is actually cheaper than its peers from a cost perspective.
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.
Overall, Invesco International Bond Y ( OIBYX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.
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