NEW YORK (TheStreet) -- TheStreet.com Ratings initiated coverage of three fixed-income mutual funds that accrued a track record of three years of risk and performance data by the end of November. Two of the funds, which opened for business in November 2006, received "buy"-level ratings and one "sell."
At an initial rating of A, the
American Century Core Plus Fund
offers a broadly diversified mix of fixed-income securities, including government, corporate, mortgage-backed, high-yield and emerging-market debt. Before the 4.5% sales fee, the fund returned 14% in the past year and averaged 7.5% over three years.
Bank of America
Capital One Bank
Corrections Corporation of America
are some of the companies whose debt is contained in the 39% corporate slice of the portfolio.
American Century Short Duration Fund
follows with an initial grade of B-minus, the lowest in the "buy" category. Returns came in at 7% over one year and 5.5% over three years before a 2.25% sales fee. The fund differs from the Core Plus fund in that it has a lower duration, from 4.5 to just 1.8 years. Nearly 75% of fund holdings reach maturity in one to three years.
The third newly rated bond fund starts off in the "sell" range, at a rating of E-plus. The
Oppenheimer Rochester Minnesota Municipal Fund
turned in an impressive 25% one-year performance and may be a good option for residents of Minnesota looking to avoid federal and state income taxes. The fund is sensitive to moves in interest rates, with a duration of eight years and an average maturity of 13.5 years. The low rating results from an annualize loss of 0.5% over three years, or minus 2.1% with the 4.75% sales fee that turned the hypothetical $10,000 investment into $9,387.82 on Nov. 30, according to a handy tool on
TheStreet.com Ratings condenses the available fund performance and risk data into a single composite opinion of each fund's risk-adjusted performance. This allows for the unbiased identification of funds that have historically done well and those that have underperformed the market. While there is no guarantee of future performance, these investment ratings provide a solid framework for making informed, timely investment decisions.
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Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.