Looking for an Investment Grade Bond - Intermediate fund? You may want to consider Western Asset Global Strategy Income I (SDSYX) as a possible option. SDSYX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.

Objective

We classify SDSYX in the Investment Grade Bond - Intermediate category, an area rife with potential choices. Investment Grade Bond - Intermediate funds target the middle part of the curve, typically by investing in bonds that mature in more than three years but less than 15 years. At these maturity levels, fixed income instruments have medium duration risk--but they compensate investors with a respectable yield compared to shorter maturity options. Finally, a focus on investment grade ensures that these funds are safer, but yields will be lower than in the junk bond category.

History of Fund/Manager

SDSYX is a part of the Franklin family of funds, a company based out of San Mateo, CA. Western Asset Global Strategy Income I made its debut in October of 1995, and since then, SDSYX has accumulated about $608.83 million in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.

Performance

Of course, investors look for strong performance in funds. SDSYX has a 5-year annualized total return of 1.5% 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 -0.76%, 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. The standard deviation of SDSYX over the past three years is 7.05% compared to the category average of 12.59%. Looking at the past 5 years, the fund's standard deviation is 8.96% compared to the category average of 13.72%. This makes the fund less volatile than its peers over the past half-decade.

With a beta of 0.51, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, SDSYX has a positive alpha of 1.57, 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, SDSYX has 20.85% in medium quality bonds, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 63.82%, giving SDSYX an average quality of BBB. This means that it focuses on medium quality securities.

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, SDSYX is a no load fund. It has an expense ratio of 0.63% compared to the category average of 0.95%. SDSYX is actually cheaper than its peers when you consider factors like cost.

This fund requires a minimum initial investment of $1 million, while there is no minimum for each subsequent investment.

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, Western Asset Global Strategy Income I ( SDSYX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

For additional information on the Investment Grade Bond - 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 SDSYX too for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Get Your Free (SDSYX): Fund Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research