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Is LFRAX a Strong Bond Fund Right Now?

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Have you been searching for a Government - Bonds: Misc fund? You might want to begin with Lord Abbett Floating Rate A (LFRAX - Free Report) . LFRAX possesses a Zacks Mutual Fund Rank of 3 (Hold), 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

LFRAX is a part of the Lord Abbett family of funds, a company based out of Jersey City, NJ. Lord Abbett Floating Rate A debuted in December of 2007. Since then, LFRAX has accumulated assets of about $1.79 billion, according to the most recently available information. 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. This fund in particular has delivered a 5-year annualized total return of 3.53%, and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 1.82%, 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 LFRAX over the past three years is 9.59% compared to the category average of 14.25%. Over the past 5 years, the standard deviation of the fund is 7.51% compared to the category average of 11.96%. This makes the fund less volatile than its peers over the past half-decade.

LFRAX carries a beta of 0.15, 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 2.52, which measures performance on a risk-adjusted basis.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, LFRAX is a load fund. It has an expense ratio of 0.80% compared to the category average of 0.85%. 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 neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a somewhat average 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. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


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