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There are plenty of choices in the Diversified Bonds category, but where should you start your research? Well, one fund that might be worth investigating is PIMCO CommoditiesPlus Strategy A (PCLAX - Free Report) . PCLAX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
We classify PCLAX in the Diversified Bonds category, an area that is rife with potential choices. Diversified Bonds funds offer exposure to a wide variety of fixed income types, stretching across various issuers, credit levels, and maturities. Generally speaking, bond funds here will have sizable exposure to government debt, as well as modest holdings in the corporate bond market too.
History of Fund/Manager
PIMCO Funds is based in Newport Beach, CA, and is the manager of PCLAX. PIMCO CommoditiesPlus Strategy A made its debut in June of 2010, and since then, PCLAX has accumulated about $108.07 million in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 18.75%, 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 1.31%, which places it in the top third during this time-frame.
It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.
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 PCLAX over the past three years is 12.14% compared to the category average of 13.66%. The fund's standard deviation over the past 5 years is 16.88% compared to the category average of 13.67%. This makes the fund more volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.
If you believe interest rates will rise, this is an important factor to look at. PCLAX has a modified duration of 0.72, which suggests that the fund will decline 0.72% 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 4.65% means that a $10,000 investment should result in a yearly payout of $465.
For those seeking a strong level of current income, a higher coupon is typically good news. However, it could pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Since income is just one part of the bond picture, investors need to consider risk relative to broad benchmarks. With a beta of -0.74, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, PCLAX has a positive alpha of 17.11, 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, PCLAX has 88.98% in high quality bonds rated at least 'AA' or higher. The fund has an average quality of AAA, and focuses on high quality securities.
Expenses
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, PCLAX is a load fund. It has an expense ratio of 1.19% compared to the category average of 0.95%. Looking at the fund from a cost perspective, PCLAX is actually more expensive than its peers.
While the minimum initial investment for the product is $1,000, investors should also note that each subsequent investment needs to be at least $50.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, even with its comparatively strong performance, average downside risk, and higher fees, PIMCO CommoditiesPlus Strategy A ( PCLAX ) has a high Zacks Mutual Fund rank, and therefore looks a good potential choice for investors right now.
Your research on the Diversified Bonds 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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Is PCLAX a Strong Bond Fund Right Now?
There are plenty of choices in the Diversified Bonds category, but where should you start your research? Well, one fund that might be worth investigating is PIMCO CommoditiesPlus Strategy A (PCLAX - Free Report) . PCLAX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
We classify PCLAX in the Diversified Bonds category, an area that is rife with potential choices. Diversified Bonds funds offer exposure to a wide variety of fixed income types, stretching across various issuers, credit levels, and maturities. Generally speaking, bond funds here will have sizable exposure to government debt, as well as modest holdings in the corporate bond market too.
History of Fund/Manager
PIMCO Funds is based in Newport Beach, CA, and is the manager of PCLAX. PIMCO CommoditiesPlus Strategy A made its debut in June of 2010, and since then, PCLAX has accumulated about $108.07 million in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 18.75%, 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 1.31%, which places it in the top third during this time-frame.
It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.
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 PCLAX over the past three years is 12.14% compared to the category average of 13.66%. The fund's standard deviation over the past 5 years is 16.88% compared to the category average of 13.67%. This makes the fund more volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.
If you believe interest rates will rise, this is an important factor to look at. PCLAX has a modified duration of 0.72, which suggests that the fund will decline 0.72% 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 4.65% means that a $10,000 investment should result in a yearly payout of $465.
For those seeking a strong level of current income, a higher coupon is typically good news. However, it could pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Since income is just one part of the bond picture, investors need to consider risk relative to broad benchmarks. With a beta of -0.74, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, PCLAX has a positive alpha of 17.11, 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, PCLAX has 88.98% in high quality bonds rated at least 'AA' or higher. The fund has an average quality of AAA, and focuses on high quality securities.
Expenses
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, PCLAX is a load fund. It has an expense ratio of 1.19% compared to the category average of 0.95%. Looking at the fund from a cost perspective, PCLAX is actually more expensive than its peers.
While the minimum initial investment for the product is $1,000, investors should also note that each subsequent investment needs to be at least $50.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, even with its comparatively strong performance, average downside risk, and higher fees, PIMCO CommoditiesPlus Strategy A ( PCLAX ) has a high Zacks Mutual Fund rank, and therefore looks a good potential choice for investors right now.
Your research on the Diversified Bonds 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.