There are plenty of choices in the Government Mortgage - Short category, but where should you start your research? Well, one fund that you should consider investigating is Fidelity Conservative Income Bond . FCONX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes FCONX as Government Mortgage - Short, which is a segment packed with options. Government Mortgage - Short funds focus on the mortgage-backed securities (MBS) market. This market takes mortgages, packages them together, and sells off the pooled securities to investors. This particular category focuses on MBS that usually have less than three years until maturity, giving the funds here a lower yield, but lower interest rate sensitivity as well.
History of Fund/Manager
Fidelity is based in Boston, MA, and is the manager of FCONX. Fidelity Conservative Income Bond debuted in March of 2011. Since then, FCONX has accumulated assets of about $2.62 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 1.05%, and it sits 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 1.54%, 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. Over the past three years, FCONX's standard deviation comes in at 0.26%, compared to the category average of 4.92%. The fund's standard deviation over the past 5 years is 0.22% compared to the category average of 5.19%. 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, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
For investors who think interest rates will rise, this is an important factor to consider. FCONX has a modified duration of 0.15, which suggests that the fund will decline 0.15% 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. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 3.1% means that a $10,000 investment should result in a yearly payout of $310.
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.
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, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, FCONX has a positive alpha of 0.29, which measures performance on a risk-adjusted basis.
Expenses
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, FCONX is a no load fund. It has an expense ratio of 0.35% compared to the category average of 0.88%. FCONX 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 $0; each subsequent investment has no minimum amount.
Bottom Line
Overall, Fidelity Conservative Income Bond ( FCONX ) has a neutral Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
For additional information on the Government Mortgage - Short 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 FCONX 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.
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Is FCONX a Strong Bond Fund Right Now?
There are plenty of choices in the Government Mortgage - Short category, but where should you start your research? Well, one fund that you should consider investigating is Fidelity Conservative Income Bond . FCONX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes FCONX as Government Mortgage - Short, which is a segment packed with options. Government Mortgage - Short funds focus on the mortgage-backed securities (MBS) market. This market takes mortgages, packages them together, and sells off the pooled securities to investors. This particular category focuses on MBS that usually have less than three years until maturity, giving the funds here a lower yield, but lower interest rate sensitivity as well.
History of Fund/Manager
Fidelity is based in Boston, MA, and is the manager of FCONX. Fidelity Conservative Income Bond debuted in March of 2011. Since then, FCONX has accumulated assets of about $2.62 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 1.05%, and it sits 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 1.54%, 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. Over the past three years, FCONX's standard deviation comes in at 0.26%, compared to the category average of 4.92%. The fund's standard deviation over the past 5 years is 0.22% compared to the category average of 5.19%. 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, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
For investors who think interest rates will rise, this is an important factor to consider. FCONX has a modified duration of 0.15, which suggests that the fund will decline 0.15% 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. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 3.1% means that a $10,000 investment should result in a yearly payout of $310.
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.
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, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, FCONX has a positive alpha of 0.29, which measures performance on a risk-adjusted basis.
Expenses
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, FCONX is a no load fund. It has an expense ratio of 0.35% compared to the category average of 0.88%. FCONX 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 $0; each subsequent investment has no minimum amount.
Bottom Line
Overall, Fidelity Conservative Income Bond ( FCONX ) has a neutral Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
For additional information on the Government Mortgage - Short 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 FCONX 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.