Any investors hoping to find an International Bond - Emerging fund could think about starting with T. Rowe Price Emerging Markets Bond (
PREMX Quick Quote PREMX - Free Report) . PREMX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance. Objective
We classify PREMX in the International Bond - Emerging category, an area rife with many investment choices. International Bond - Emerging funds focus on fixed income securities from emerging nations from around the globe. This usually results in exposure to economies like China, Brazil, India, South Africa, and Indonesia, just to name a few. Funds here offer geographic diversification, but they can also introduce currency risk into the picture as well.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of PREMX. Since T. Rowe Price Emerging Markets Bond made its debut in December of 1994, PREMX has garnered more than $1.64 billion in assets. Michael J. Conelius is the fund's current manager and has held that role since December of 1994.
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 5.1%, and is in the middle 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 1.8%, 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. The standard deviation of PREMX over the past three years is 13.12% compared to the category average of 12.88%. The fund's standard deviation over the past 5 years is 10.92% compared to the category average of 11.06%. This makes the fund less volatile than its peers over the past half-decade.
With a beta of 0.98, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, PREMX has a positive alpha of 0.74, which measures performance on a risk-adjusted basis.
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, PREMX has 33.8% in medium quality bonds, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 62.57%, giving PREMX an average quality of BBB. This means that it focuses on medium quality securities.
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, PREMX is a no load fund. It has an expense ratio of 0.90% compared to the category average of 1.14%. PREMX is actually cheaper than its peers when you consider factors like cost.
Investors should also note that the minimum initial investment for the product is $2,500 and that each subsequent investment needs to be at $100.
Overall, T. Rowe Price Emerging Markets Bond ( PREMX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, T. Rowe Price Emerging Markets Bond ( PREMX ) looks like a good potential choice for investors right now.
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