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If you have been looking for Government - Bonds: Misc funds, it would not be wise to start your search with Lord Abbett Floating Rate A (LFRAX - Free Report) . LFRAX holds a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify LFRAX in the Government - Bonds: Misc category, an area rife with potential choices. Government - Bonds: Misc funds hold securities issued by the federal government of the United States of America. These are seen as extremely low risk securities from a default perspective, and are often regarded as risk-free assets. This category stretches across the curve, so the yields and interest rate sensitivity will vary, though a mixed approach generally results 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. The Lord Abbett Floating Rate A made its debut in December of 2007 and LFRAX has managed to accumulate roughly $2.94 billion in assets, as of the most recently available information. The fund's current manager is a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 3.5%, and is in the top 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 3.56%, 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 2.73% compared to the category average of 8.94%. Over the past 5 years, the standard deviation of the fund is 2.86% compared to the category average of 9.13%. 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.
If you believe interest rates will rise, this is an important factor to look at. LFRAX has a modified duration of 0.2, which suggests that the fund will decline 0.2% 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 calculates the fund's average payout in a given year. For example, this fund's average coupon of 6.11% means that a $10,000 investment should result in a yearly payout of $611.
A higher coupon is good for those seeking a strong level of current income, but it could also 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. With a beta of -0.24, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, LFRAX has a positive alpha of 3.06, which measures performance on a risk-adjusted basis.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, LFRAX is a load fund. It has an expense ratio of 0.81% compared to the category average of 0.87%. Looking at the fund from a cost perspective, LFRAX is actually cheaper than its peers.
While the minimum initial investment for the product is $1,500, investors should also note that there is no minimum for each subsequent investment.
Bottom Line
Overall, Lord Abbett Floating Rate A ( LFRAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Government - Bonds: Misc, make sure to go to www.zacks.com/funds/mutual-funds 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 LFRAX a Strong Bond Fund Right Now?
If you have been looking for Government - Bonds: Misc funds, it would not be wise to start your search with Lord Abbett Floating Rate A (LFRAX - Free Report) . LFRAX holds a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify LFRAX in the Government - Bonds: Misc category, an area rife with potential choices. Government - Bonds: Misc funds hold securities issued by the federal government of the United States of America. These are seen as extremely low risk securities from a default perspective, and are often regarded as risk-free assets. This category stretches across the curve, so the yields and interest rate sensitivity will vary, though a mixed approach generally results 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. The Lord Abbett Floating Rate A made its debut in December of 2007 and LFRAX has managed to accumulate roughly $2.94 billion in assets, as of the most recently available information. The fund's current manager is a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 3.5%, and is in the top 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 3.56%, 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 2.73% compared to the category average of 8.94%. Over the past 5 years, the standard deviation of the fund is 2.86% compared to the category average of 9.13%. 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.
If you believe interest rates will rise, this is an important factor to look at. LFRAX has a modified duration of 0.2, which suggests that the fund will decline 0.2% 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 calculates the fund's average payout in a given year. For example, this fund's average coupon of 6.11% means that a $10,000 investment should result in a yearly payout of $611.
A higher coupon is good for those seeking a strong level of current income, but it could also 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. With a beta of -0.24, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, LFRAX has a positive alpha of 3.06, which measures performance on a risk-adjusted basis.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, LFRAX is a load fund. It has an expense ratio of 0.81% compared to the category average of 0.87%. Looking at the fund from a cost perspective, LFRAX is actually cheaper than its peers.
While the minimum initial investment for the product is $1,500, investors should also note that there is no minimum for each subsequent investment.
Bottom Line
Overall, Lord Abbett Floating Rate A ( LFRAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Government - Bonds: Misc, make sure to go to www.zacks.com/funds/mutual-funds 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.