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There are plenty of choices in the High Yield - Bonds category, but where should you start your research? Well, one fund that may not be worth investigating is Eaton Vance Floating-Rate Advantage A (EAFAX - Free Report) . EAFAX has a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
EAFAX is part of the High Yield - Bonds section, which is a segment that boasts many possible options. Often referred to as " junk " bonds, High Yield - Bonds funds sit below investment grade, meaning they are at a high default risk compared to their investment grade peers. However, one advantage to junk bonds is that they generally pay out higher yields while posing similar interest rate risks to their investment grade counterparts.
History of Fund/Manager
EAFAX finds itself in the Eaton Vance family, based out of Boston, MA. Eaton Vance Floating-Rate Advantage A made its debut in April of 2008, and since then, EAFAX has accumulated about $1.86 billion in assets, per the most up-to-date date available. The fund is currently managed by Scott H. Page who has been in charge of the fund since April of 2008.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 4.08%, and is in the middle third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 5.87%, which places it in the bottom 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. EAFAX's standard deviation over the past three years is 3.19% compared to the category average of 7.94%. Over the past 5 years, the standard deviation of the fund is 3.66% compared to the category average of 8.36%. 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 those that believe interest rates will rise, this is an important factor to consider. EAFAX has a modified duration of 0.18, which suggests that the fund will decline 0.18% for every hundred-basis-point increase in interest rates.
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. This metric takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 5.52% means that a $10,000 investment should result in a yearly payout of $552.
If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur 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 -0.27, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, EAFAX has a positive alpha of 3.52, 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, EAFAX is a load fund. It has an expense ratio of 1.40% compared to the category average of 1.02%. So, EAFAX is actually more expensive than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment has no minimum amount.
Bottom Line
Overall, Eaton Vance Floating-Rate Advantage A ( EAFAX ) has a low Zacks Mutual Fund rank, similar performance, average downside risk, and higher fees compared to its peers.
Want even more information about EAFAX? 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. 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.
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Is EAFAX a Strong Bond Fund Right Now?
There are plenty of choices in the High Yield - Bonds category, but where should you start your research? Well, one fund that may not be worth investigating is Eaton Vance Floating-Rate Advantage A (EAFAX - Free Report) . EAFAX has a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
EAFAX is part of the High Yield - Bonds section, which is a segment that boasts many possible options. Often referred to as " junk " bonds, High Yield - Bonds funds sit below investment grade, meaning they are at a high default risk compared to their investment grade peers. However, one advantage to junk bonds is that they generally pay out higher yields while posing similar interest rate risks to their investment grade counterparts.
History of Fund/Manager
EAFAX finds itself in the Eaton Vance family, based out of Boston, MA. Eaton Vance Floating-Rate Advantage A made its debut in April of 2008, and since then, EAFAX has accumulated about $1.86 billion in assets, per the most up-to-date date available. The fund is currently managed by Scott H. Page who has been in charge of the fund since April of 2008.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 4.08%, and is in the middle third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 5.87%, which places it in the bottom 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. EAFAX's standard deviation over the past three years is 3.19% compared to the category average of 7.94%. Over the past 5 years, the standard deviation of the fund is 3.66% compared to the category average of 8.36%. 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 those that believe interest rates will rise, this is an important factor to consider. EAFAX has a modified duration of 0.18, which suggests that the fund will decline 0.18% for every hundred-basis-point increase in interest rates.
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. This metric takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 5.52% means that a $10,000 investment should result in a yearly payout of $552.
If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur 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 -0.27, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, EAFAX has a positive alpha of 3.52, 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, EAFAX is a load fund. It has an expense ratio of 1.40% compared to the category average of 1.02%. So, EAFAX is actually more expensive than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment has no minimum amount.
Bottom Line
Overall, Eaton Vance Floating-Rate Advantage A ( EAFAX ) has a low Zacks Mutual Fund rank, similar performance, average downside risk, and higher fees compared to its peers.
Want even more information about EAFAX? 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. 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.