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On the lookout for an Investment Grade Bond - Intermediate fund? Starting with PIMCO Total Return A (PTTAX - Free Report) should not be a possibility at this time. PTTAX carries a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify PTTAX 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
PTTAX finds itself in the PIMCO Funds family, based out of Newport Beach, CA. PIMCO Total Return A made its debut in May of 1987, and since then, PTTAX has accumulated about $7.60 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. PTTAX has a 5-year annualized total return of 2.21% 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 2.2%, 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. PTTAX's standard deviation over the past three years is 2.74% compared to the category average of 7.89%. Looking at the past 5 years, the fund's standard deviation is 2.94% compared to the category average of 8.21%. 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. PTTAX has a modified duration of 3.47, which suggests that the fund will decline 3.47% for every hundred-basis-point increase in interest rates.
Income
It is important to consider the fund's average coupon because income is often a big reason for purchasing a fixed income security. A fund's average coupon is simply its average payout in a given year. For example, this fund's average coupon of 4.16% means that a $10,000 investment should result in a yearly payout of $416.
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.
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 0.87, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, PTTAX has a negative alpha of -0.22, 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, PTTAX has 57.33% in high quality bonds rated at least 'AA' or higher, while 35.99% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of AA, and focuses on high quality securities.
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, PTTAX is a load fund. It has an expense ratio of 0.80% compared to the category average of 0.82%. Looking at the fund from a cost perspective, PTTAX is actually cheaper than its peers.
This fund requires a minimum initial investment of $1,000, and each subsequent investment should be at least $50.
Bottom Line
Overall, PIMCO Total Return A ( PTTAX ) has a low Zacks Mutual Fund rank, strong performance, better downside risk, and lower fees compared to its peers.
This could just be the start of your research on PTTAXin the Investment Grade Bond - Intermediate category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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.
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Is PTTAX a Strong Bond Fund Right Now?
On the lookout for an Investment Grade Bond - Intermediate fund? Starting with PIMCO Total Return A (PTTAX - Free Report) should not be a possibility at this time. PTTAX carries a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify PTTAX 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
PTTAX finds itself in the PIMCO Funds family, based out of Newport Beach, CA. PIMCO Total Return A made its debut in May of 1987, and since then, PTTAX has accumulated about $7.60 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. PTTAX has a 5-year annualized total return of 2.21% 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 2.2%, 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. PTTAX's standard deviation over the past three years is 2.74% compared to the category average of 7.89%. Looking at the past 5 years, the fund's standard deviation is 2.94% compared to the category average of 8.21%. 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. PTTAX has a modified duration of 3.47, which suggests that the fund will decline 3.47% for every hundred-basis-point increase in interest rates.
Income
It is important to consider the fund's average coupon because income is often a big reason for purchasing a fixed income security. A fund's average coupon is simply its average payout in a given year. For example, this fund's average coupon of 4.16% means that a $10,000 investment should result in a yearly payout of $416.
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.
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 0.87, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, PTTAX has a negative alpha of -0.22, 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, PTTAX has 57.33% in high quality bonds rated at least 'AA' or higher, while 35.99% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of AA, and focuses on high quality securities.
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, PTTAX is a load fund. It has an expense ratio of 0.80% compared to the category average of 0.82%. Looking at the fund from a cost perspective, PTTAX is actually cheaper than its peers.
This fund requires a minimum initial investment of $1,000, and each subsequent investment should be at least $50.
Bottom Line
Overall, PIMCO Total Return A ( PTTAX ) has a low Zacks Mutual Fund rank, strong performance, better downside risk, and lower fees compared to its peers.
This could just be the start of your research on PTTAXin the Investment Grade Bond - Intermediate category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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.