This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Biggest Bond Fund Ratings Changes

Investors are not advised to trade their government bond funds for high-yield offerings. Not yet, at least.

But the action of funds tracked by TheStreet.com Ratings with the biggest ratings grade changes suggests an incipient shift in sentiment in the bond market away from the safety of government funds. The market seems to have taken at least a quick sideways glance toward the high-yield side of the bond market.

The five high-yield bond funds in the top listing of the accompanying table achieved the greatest recent ratings grade improvements among the fixed-income funds tracked by TheStreet.com Ratings. But the improvements represented only modest improvements from "sell-recommended" grades in the "D" and "E" ranges to the middling "C" range, which equates with "hold" recommendations.

That represents a small step in a positive direction for the riskier end of the bond fund spectrum. But it is still an extremely small step -- essentially analogous to a boxer climbing off the canvas and then leaning on the ropes.

U.S. government bond funds monopolize the opposite end of the ratings grade change array. Three of the government bond funds on the lower list of the table skidded from TheStreet.com Ratings grades in the "buy-recommended" "A" range and arrived in "C" territory, representing downgrades to "holds." A moderately leveraged member of the deepest downgrade list, the Rydex Series Government Long Bond 1.2X Strategy Fund (FYABX), tumbled from a C grade in "hold-recommended" territory to an E+ and a "sell" recommendation.

The last government bond fund on the "Most Deteriorated" list, the AMF Short-U.S. Government Fund (ASITX), slipped from the highest possible mark of A+ to a grade of B, which equates with a weaker "buy" recommendation than the fund enjoyed prior to its downgrade.

Each of the funds in the "Most Improved" group has achieved a positive return for the past three months, an improvement from the negative total return each has experienced over the past 12 months.

Of the five funds on the "Most Deteriorated" roster, only the SM&R Government Bond Fund (SMRGX) has managed a positive return for the past three months -- a slim gain of 0.14% -- with the others in negative territory. All five, however, are still ahead for the past 12 months.

BIGGEST BOND FUND RATINGS GRADE CHANGES
NAME, TICKER & TheStreet.com RATINGS CURRENT GRADE PREV. GRADE RECOMMENDATION CHANGE INVESTMENT OBJECTIVE 3-MO. TOTAL RET'N (%) 12-MO. TOTAL RET'N (%)
MOST IMPROVED
SunAmerica High Yield A (SHNAX) C- E Sell to Hold Corporate - High Yield 2.36 -3.52
Fidelity Adv Hi Income Advantage A (FAHDX) C- E Sell to Hold Corporate - High Yield 3.37 -3.81
Western Asset Tr-High Yld Inst (WAHYX) C E+ Sell to Hold Corporate - High Yield 2.64 -3.09
T. Rowe Price High Yield Fd (PRHYX) C E+ Sell to Hold Corporate - High Yield 2.52 -1.39
TCW High Yield Bond N (TGHNX) C- D- Sell to Hold Corporate - High Yield 3.26 -1.61
MOST DETERIORATED
Putnam US Govt Income Tr A (PGSIX) C+ A+ Buy to Hold US Government - Short & Interm -0.17 6.71
Rydex Ser-Govt Lg Bd 1.2x Strgy A (RYABX) E+ C Hold to Sell US Government - Long -1.91 10.07
DFA Five-Year Government (DFFGX) C A- Buy to Hold US Government - Short & Interm -0.66 2.89
SM&R Government Bond Fund T (SMRGX) C+ A- Buy to Hold US Government - Long 0.14 7.84
AMF Short-U.S. Government Fund (ASITX) B A+ Strong Buy to Buy US Government - Short & Interm -0.20 4.41
Lehman Brothers Aggregate Bond Index 0.27 6.86
Source: TheStreet.com Ratings - Data as of 4/30/2008.

For an explanation of our ratings, click here.
Richard Widows is a senior financial analyst for TheStreet.com Ratings. Prior to joining TheStreet.com, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $112.76 0.00%
FB $89.43 0.00%
GOOG $618.25 0.00%
TSLA $249.06 0.00%
YHOO $32.24 0.00%

Markets

Chart of I:DJI
DOW 16,528.03 -114.98 -0.69%
S&P 500 1,972.18 -16.69 -0.84%
NASDAQ 4,776.5080 -51.8170 -1.07%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs