If you have been looking for High Yield - Bonds funds, a place to start could be Fidelity Floating Rate High Income. FFRHX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We note that FFRHX is a High Yield - Bonds option, which is an area loaded with different investment choices. High Yield - Bonds funds are often known as " junk " bonds since they are below investment grade. This means they are at an elevated risk of default, at least when compared to their investment grade peers. On the plus side, junk bonds generally pay out higher yields, all while posing similar interest rate risks as we see with their investment grade counterparts.
History of Fund/Manager
FFRHX finds itself in the Fidelity family, based out of Boston, MA. The Fidelity Floating Rate High Income made its debut in August of 2000 and FFRHX has managed to accumulate roughly $8.12 billion in assets, as of the most recently available information. Eric Mollenhauer is the fund's current manager and has held that role since April of 2013.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 3.25%, and it sits 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 3.65%, which places it in the middle 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. The standard deviation of FFRHX over the past three years is 2.84% compared to the category average of 7.93%. Looking at the past 5 years, the fund's standard deviation is 2.6% compared to the category average of 7.85%. This makes the fund less volatile than its peers over the past half-decade.
Income
Since income is, of course, a big reason for purchasing a fixed income security, it is always 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 5.07% means that a $10,000 investment should result in a yearly payout of $507.
For those seeking a strong level of current income, a higher coupon is typically good news. However, it could pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks. FFRHX carries a beta of 0.08, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 2.8, which measures performance on a risk-adjusted basis.
Expenses
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, FFRHX is a no load fund. It has an expense ratio of 0.69% compared to the category average of 1.03%. FFRHX is actually cheaper than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment has no minimum amount.
Bottom Line
Overall, Fidelity Floating Rate High Income has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, better downside risk, and lower fees, this fund looks like a great potential choice for investors right now.
Want even more information about FFRHX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
Image: Bigstock
Is FFRHX a Strong Bond Fund Right Now?
If you have been looking for High Yield - Bonds funds, a place to start could be Fidelity Floating Rate High Income. FFRHX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We note that FFRHX is a High Yield - Bonds option, which is an area loaded with different investment choices. High Yield - Bonds funds are often known as " junk " bonds since they are below investment grade. This means they are at an elevated risk of default, at least when compared to their investment grade peers. On the plus side, junk bonds generally pay out higher yields, all while posing similar interest rate risks as we see with their investment grade counterparts.
History of Fund/Manager
FFRHX finds itself in the Fidelity family, based out of Boston, MA. The Fidelity Floating Rate High Income made its debut in August of 2000 and FFRHX has managed to accumulate roughly $8.12 billion in assets, as of the most recently available information. Eric Mollenhauer is the fund's current manager and has held that role since April of 2013.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 3.25%, and it sits 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 3.65%, which places it in the middle 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. The standard deviation of FFRHX over the past three years is 2.84% compared to the category average of 7.93%. Looking at the past 5 years, the fund's standard deviation is 2.6% compared to the category average of 7.85%. This makes the fund less volatile than its peers over the past half-decade.
Income
Since income is, of course, a big reason for purchasing a fixed income security, it is always 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 5.07% means that a $10,000 investment should result in a yearly payout of $507.
For those seeking a strong level of current income, a higher coupon is typically good news. However, it could pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks. FFRHX carries a beta of 0.08, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 2.8, which measures performance on a risk-adjusted basis.
Expenses
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, FFRHX is a no load fund. It has an expense ratio of 0.69% compared to the category average of 1.03%. FFRHX is actually cheaper than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment has no minimum amount.
Bottom Line
Overall, Fidelity Floating Rate High Income has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, better downside risk, and lower fees, this fund looks like a great potential choice for investors right now.
Want even more information about FFRHX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.