We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
If you're looking for an Investment Grade Bond - Intermediate fund category, then a potential option is Fidelity Corporate Bond Fund (FCBFX - Free Report) . FCBFX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We note that FCBFX is an Investment Grade Bond - Intermediate option, which is a segment loaded with many different investment options. By targeting bonds that mature in more than three years but less than 15 years, Investment Grade Bond - Intermediate funds are a middle of the curve option. Fixed income instruments at this maturity level usually have medium duration risk, but their yields are respectable, especially in comparison to their short-maturity counterparts. Additionally, a focus on investment grade makes these funds safer, but yields tend to be lower than in the junk bond category.
History of Fund/Manager
Fidelity is based in Boston, MA, and is the manager of FCBFX. Since Fidelity Corporate Bond Fund made its debut in May of 2010, FCBFX has garnered more than $1.15 billion in assets. David Prothro is the fund's current manager and has held that role since May of 2010.
Performance
Investors naturally seek funds with strong performance. FCBFX has a 5-year annualized total return of 2.97% and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 2.23%, which places it in the top 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. Compared to the category average of 3.01%, the standard deviation of FCBFX over the past three years is 3.87%. Looking at the past 5 years, the fund's standard deviation is 4.26% compared to the category average of 3.28%. This makes the fund more volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
If you believe interest rates will rise, this is an important factor to look at. FCBFX has a modified duration of 6.85, which suggests that the fund will decline 6.85% for every hundred-basis-point increase in interest rates.
Income
Income is often a big reason for purchasing a fixed income security, so it is important to consider the fund's average coupon. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 4.19% means that a $10,000 investment should result in a yearly payout of $419.
A higher coupon is good for those seeking a strong level of current income, but it could also pose 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 1.28, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, FCBFX has a positive alpha of 0.75, which measures performance on a risk-adjusted basis.
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, FCBFX is a no load fund. It has an expense ratio of 0.45% compared to the category average of 0.84%. From a cost perspective, FCBFX is actually cheaper than its peers.
This fund requires a minimum initial investment of $2,500, while there is no minimum for each subsequent investment.
Bottom Line
Overall, Fidelity Corporate Bond Fund 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.
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 FCBFX too for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is FCBFX a Strong Bond Fund Right Now?
If you're looking for an Investment Grade Bond - Intermediate fund category, then a potential option is Fidelity Corporate Bond Fund (FCBFX - Free Report) . FCBFX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We note that FCBFX is an Investment Grade Bond - Intermediate option, which is a segment loaded with many different investment options. By targeting bonds that mature in more than three years but less than 15 years, Investment Grade Bond - Intermediate funds are a middle of the curve option. Fixed income instruments at this maturity level usually have medium duration risk, but their yields are respectable, especially in comparison to their short-maturity counterparts. Additionally, a focus on investment grade makes these funds safer, but yields tend to be lower than in the junk bond category.
History of Fund/Manager
Fidelity is based in Boston, MA, and is the manager of FCBFX. Since Fidelity Corporate Bond Fund made its debut in May of 2010, FCBFX has garnered more than $1.15 billion in assets. David Prothro is the fund's current manager and has held that role since May of 2010.
Performance
Investors naturally seek funds with strong performance. FCBFX has a 5-year annualized total return of 2.97% and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 2.23%, which places it in the top 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. Compared to the category average of 3.01%, the standard deviation of FCBFX over the past three years is 3.87%. Looking at the past 5 years, the fund's standard deviation is 4.26% compared to the category average of 3.28%. This makes the fund more volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
If you believe interest rates will rise, this is an important factor to look at. FCBFX has a modified duration of 6.85, which suggests that the fund will decline 6.85% for every hundred-basis-point increase in interest rates.
Income
Income is often a big reason for purchasing a fixed income security, so it is important to consider the fund's average coupon. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 4.19% means that a $10,000 investment should result in a yearly payout of $419.
A higher coupon is good for those seeking a strong level of current income, but it could also pose 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 1.28, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, FCBFX has a positive alpha of 0.75, which measures performance on a risk-adjusted basis.
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, FCBFX is a no load fund. It has an expense ratio of 0.45% compared to the category average of 0.84%. From a cost perspective, FCBFX is actually cheaper than its peers.
This fund requires a minimum initial investment of $2,500, while there is no minimum for each subsequent investment.
Bottom Line
Overall, Fidelity Corporate Bond Fund 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.
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 FCBFX too for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.