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On the lookout for a Government - Bonds: Misc fund? Starting with Lord Abbett Floating Rate A (LFRAX - Free Report) is one possibility. LFRAX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
LFRAX is one of many Government - Bonds: Misc funds to choose from. In their portfolios,Government - Bonds: Misc funds hold securities issued by the United States' federal government, which are often seen as risk-free assets and described as extremely low-risk from a default perspective. While a mixed approach usually results in a medium yield and risk profile, this fund category focuses across the curve, meaning the yields and interest rate sensitivity will vary.
History of Fund/Manager
Lord Abbett is responsible for LFRAX, and the company is based out of Jersey City, NJ. Since Lord Abbett Floating Rate A made its debut in December of 2007, LFRAX has garnered more than $1.47 billion in assets. A team of investment professionals is the fund's current manager.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. LFRAX has a 5-year annualized total return of 6.58%, 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 9.39%, which places it in the middle 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. LFRAX's standard deviation over the past three years is 2.19% compared to the category average of 12.82%. The standard deviation of the fund over the past 5 years is 3.29% compared to the category average of 13.26%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
For investors who think interest rates will rise, this is an important factor to consider. LFRAX has a modified duration of -.01, which suggests that the fund will decline -0.01% for every hundred-basis-point increase in interest rates.
Income
Since income is, of course, a big reason for purchasing a fixed income security, it is always important to consider the fund's average coupon. A fund's average coupon is simply its average payout in a given year. For example, this fund's average coupon of 1.04% means that a $10,000 investment should result in a yearly payout of $104.
A higher coupon is good for those seeking a strong level of current income, but it could also 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 -0.1, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, LFRAX has a positive alpha of 4.07 , which measures performance on a risk-adjusted basis.
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, LFRAX is a load fund. It has an expense ratio of 0.80% compared to the category average of 0.94%. Looking at the fund 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.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, Lord Abbett Floating Rate A ( LFRAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and lower fees, Lord Abbett Floating Rate A ( LFRAX ) looks like a great potential choice for investors right now.
This could just be the start of your research on LFRAX in the Government - Bonds: Misc category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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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Is LFRAX a Strong Bond Fund Right Now?
On the lookout for a Government - Bonds: Misc fund? Starting with Lord Abbett Floating Rate A (LFRAX - Free Report) is one possibility. LFRAX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
LFRAX is one of many Government - Bonds: Misc funds to choose from. In their portfolios,Government - Bonds: Misc funds hold securities issued by the United States' federal government, which are often seen as risk-free assets and described as extremely low-risk from a default perspective. While a mixed approach usually results in a medium yield and risk profile, this fund category focuses across the curve, meaning the yields and interest rate sensitivity will vary.
History of Fund/Manager
Lord Abbett is responsible for LFRAX, and the company is based out of Jersey City, NJ. Since Lord Abbett Floating Rate A made its debut in December of 2007, LFRAX has garnered more than $1.47 billion in assets. A team of investment professionals is the fund's current manager.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. LFRAX has a 5-year annualized total return of 6.58%, 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 9.39%, which places it in the middle 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. LFRAX's standard deviation over the past three years is 2.19% compared to the category average of 12.82%. The standard deviation of the fund over the past 5 years is 3.29% compared to the category average of 13.26%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
For investors who think interest rates will rise, this is an important factor to consider. LFRAX has a modified duration of -.01, which suggests that the fund will decline -0.01% for every hundred-basis-point increase in interest rates.
Income
Since income is, of course, a big reason for purchasing a fixed income security, it is always important to consider the fund's average coupon. A fund's average coupon is simply its average payout in a given year. For example, this fund's average coupon of 1.04% means that a $10,000 investment should result in a yearly payout of $104.
A higher coupon is good for those seeking a strong level of current income, but it could also 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 -0.1, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, LFRAX has a positive alpha of 4.07 , which measures performance on a risk-adjusted basis.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, LFRAX is a load fund. It has an expense ratio of 0.80% compared to the category average of 0.94%. Looking at the fund 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.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, Lord Abbett Floating Rate A ( LFRAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and lower fees, Lord Abbett Floating Rate A ( LFRAX ) looks like a great potential choice for investors right now.
This could just be the start of your research on LFRAX in the Government - Bonds: Misc category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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.