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Is LFRAX a Strong Bond Fund Right Now?

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If investors are looking at the Government - Bonds: Misc fund category, make sure to pass over Lord Abbett Floating Rate A (LFRAX - Free Report) . LFRAX bears 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

LFRAX is a part of the Lord Abbett family of funds, a company based out of Jersey City, NJ. Since Lord Abbett Floating Rate A made its debut in December of 2007, LFRAX has garnered more than $1.96 billion in assets. A team of investment professionals is the fund's current manager.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 2.93%, and it sits 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 1.92%, 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 14.44%, the standard deviation of LFRAX over the past three years is 9.61%. The fund's standard deviation over the past 5 years is 7.45% compared to the category average of 11.91%. This makes the fund less volatile than its peers over the past half-decade.

With a beta of 0.07, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, LFRAX has a positive alpha of 1.99, 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 0.84%. LFRAX is actually cheaper than its peers when you consider factors like cost.

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 similar performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.

For additional information on the Government - Bonds: Misc area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into LFRAX too for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.


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