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Is FATRX a Strong Bond Fund Right Now?

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If you've been stuck searching for Investment Grade - Bonds: Misc funds, consider Frost Total Return Bond Investor (FATRX - Free Report) as a possibility. FATRX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes FATRX as Investment Grade - Bonds: Misc, which is an investment category packed with options. Investment Grade - Bonds: Misc funds do not focus on any one part of the curve, and can hold a variety of investment grade credit levels too. Duration risk will depend on a given fund's profile, and funds in this category may not be directly comparable. Lastly, the focus on investment grade will make funds here safer, but yields will be lower than in the junk bond category.

History of Fund/Manager

Frost Funds is responsible for FATRX, and the company is based out of San Antonio, Tx. Frost Total Return Bond Investor made its debut in July of 2008, and since then, FATRX has accumulated about $383.96 million in assets, per the most up-to-date date available. Jeffery Elswick is the fund's current manager and has held that role since July of 2008.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 3.81%, and it sits 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 3.18%, 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. Compared to the category average of 8.86%, the standard deviation of FATRX over the past three years is 4.88%. The fund's standard deviation over the past 5 years is 3.99% compared to the category average of 7.51%. This makes the fund less volatile than its peers over the past half-decade.

FATRX carries a beta of 0.56, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 0.9, 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, FATRX has 57.8% in high quality bonds rated at least 'AA' or higher, while 20.82% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.

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, FATRX is a no load fund. It has an expense ratio of 0.72% compared to the category average of 0.95%. FATRX 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 $2,500; each subsequent investment needs to be at least $500.

Bottom Line

Overall, Frost Total Return Bond Investor ( FATRX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Frost Total Return Bond Investor ( FATRX ) looks like a good potential choice for investors right now.

Your research on the Investment Grade - Bonds: Misc segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.


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