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If investors are looking at the Government - Bonds: Misc fund category, Lord Abbett Floating Rate A (LFRAX - Free Report) could be a potential option. LFRAX carries 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 LFRAX is a Government - Bonds: Misc option, and this area is loaded with many different choices. Often seen as risk-free assets and described as extremely low-risk from a default perspective, Government - Bonds: Misc funds hold securities issued by the United States' federal government. This category stretches across the curve, meaning the yields and interest rate sensitivity will vary, but a mixed approach can typically result in a medium yield and risk profile.
History of Fund/Manager
Lord Abbett is based in Jersey City, NJ, and is the manager of LFRAX. Lord Abbett Floating Rate A made its debut in December of 2007, and since then, LFRAX has accumulated about $3.66 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 3.82%, and is in the top 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 5.08%, 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. The standard deviation of LFRAX over the past three years is 2.29% compared to the category average of 7.89%. The fund's standard deviation over the past 5 years is 2.19% compared to the category average of 7.76%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.
For those that believe interest rates will rise, this is an important factor to consider. LFRAX has a modified duration of 0.39, which suggests that the fund will decline 0.39% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. This metric takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 5.71% means that a $10,000 investment should result in a yearly payout of $571.
While a higher coupon is good for when you want a strong level of current income, it could present a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Investors also need to consider risk relative to broad benchmarks, as income is only one part of the bond picture. With a beta of 0.04, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, LFRAX has a positive alpha of 3.29, 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, LFRAX is a load fund. It has an expense ratio of 0.78% compared to the category average of 0.81%. Looking at the fund from a cost perspective, LFRAX is actually cheaper than its peers.
This fund requires a minimum initial investment of $1,500, while there is no minimum for each subsequent investment.
Bottom Line
Overall, Lord Abbett Floating Rate A ( LFRAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, Lord Abbett Floating Rate A ( LFRAX ) looks like a good potential choice for investors right now.
Want even more information about LFRAX? 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. 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.
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Is LFRAX a Strong Bond Fund Right Now?
If investors are looking at the Government - Bonds: Misc fund category, Lord Abbett Floating Rate A (LFRAX - Free Report) could be a potential option. LFRAX carries 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 LFRAX is a Government - Bonds: Misc option, and this area is loaded with many different choices. Often seen as risk-free assets and described as extremely low-risk from a default perspective, Government - Bonds: Misc funds hold securities issued by the United States' federal government. This category stretches across the curve, meaning the yields and interest rate sensitivity will vary, but a mixed approach can typically result in a medium yield and risk profile.
History of Fund/Manager
Lord Abbett is based in Jersey City, NJ, and is the manager of LFRAX. Lord Abbett Floating Rate A made its debut in December of 2007, and since then, LFRAX has accumulated about $3.66 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 3.82%, and is in the top 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 5.08%, 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. The standard deviation of LFRAX over the past three years is 2.29% compared to the category average of 7.89%. The fund's standard deviation over the past 5 years is 2.19% compared to the category average of 7.76%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.
For those that believe interest rates will rise, this is an important factor to consider. LFRAX has a modified duration of 0.39, which suggests that the fund will decline 0.39% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. This metric takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 5.71% means that a $10,000 investment should result in a yearly payout of $571.
While a higher coupon is good for when you want a strong level of current income, it could present a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Investors also need to consider risk relative to broad benchmarks, as income is only one part of the bond picture. With a beta of 0.04, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, LFRAX has a positive alpha of 3.29, 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, LFRAX is a load fund. It has an expense ratio of 0.78% compared to the category average of 0.81%. Looking at the fund from a cost perspective, LFRAX is actually cheaper than its peers.
This fund requires a minimum initial investment of $1,500, while there is no minimum for each subsequent investment.
Bottom Line
Overall, Lord Abbett Floating Rate A ( LFRAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, Lord Abbett Floating Rate A ( LFRAX ) looks like a good potential choice for investors right now.
Want even more information about LFRAX? 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. 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.