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High Yield - Bonds fund seekers should not consider taking a look at Eaton Vance Floating-Rate Advantage A (EAFAX - Free Report) at this time. EAFAX bears a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
EAFAX is part of the High Yield - Bonds section, which is a segment that boasts many possible options. Often referred to as "junk" bonds,High Yield - Bonds funds sit below investment grade, meaning they are at a high default risk compared to their investment grade peers. However, one advantage to junk bonds is that they generally pay out higher yields while posing similar interest rate risks to their investment grade counterparts.
History of Fund/Manager
Eaton Vance is based in Boston, MA, and is the manager of EAFAX. The Eaton Vance Floating-Rate Advantage A made its debut in April of 2008 and EAFAX has managed to accumulate roughly $910.04 million in assets, as of the most recently available information. The fund's current manager, Ralph H. Hinckley Jr, has been in charge of the fund since June of 2021.
Performance
Of course, investors look for strong performance in funds. EAFAX has a 5-year annualized total return of 5.11%, 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 7.3%, 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. EAFAX's standard deviation over the past three years is 2.91% compared to the category average of 9.15%. Looking at the past 5 years, the fund's standard deviation is 4.12% compared to the category average of 10.81%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
If you believe interest rates will rise, this is an important factor to look at. EAFAX has a modified duration of .28, which suggests that the fund will decline 0.28% 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. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 6.8% means that a $10,000 investment should result in a yearly payout of $680.
If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur if rates are lower in the future when compared to the initial purchase date of the bond. Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks.
This fund has a beta of 0.16, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, EAFAX has a positive alpha of 1.94, 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, EAFAX is a load fund. It has an expense ratio of 0.96% compared to the category average of 0.96%. Looking at the fund from a cost perspective, EAFAX is actually on par with its peers.
This fund requires a minimum initial investment of $1,000, while 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, Eaton Vance Floating-Rate Advantage A ( EAFAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and on par fees, this fund looks like a somewhat weak choice for investors right now.
This could just be the start of your research on EAFAX in the High Yield - Bonds 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. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.
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Is EAFAX a Strong Bond Fund Right Now?
High Yield - Bonds fund seekers should not consider taking a look at Eaton Vance Floating-Rate Advantage A (EAFAX - Free Report) at this time. EAFAX bears a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
EAFAX is part of the High Yield - Bonds section, which is a segment that boasts many possible options. Often referred to as "junk" bonds,High Yield - Bonds funds sit below investment grade, meaning they are at a high default risk compared to their investment grade peers. However, one advantage to junk bonds is that they generally pay out higher yields while posing similar interest rate risks to their investment grade counterparts.
History of Fund/Manager
Eaton Vance is based in Boston, MA, and is the manager of EAFAX. The Eaton Vance Floating-Rate Advantage A made its debut in April of 2008 and EAFAX has managed to accumulate roughly $910.04 million in assets, as of the most recently available information. The fund's current manager, Ralph H. Hinckley Jr, has been in charge of the fund since June of 2021.
Performance
Of course, investors look for strong performance in funds. EAFAX has a 5-year annualized total return of 5.11%, 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 7.3%, 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. EAFAX's standard deviation over the past three years is 2.91% compared to the category average of 9.15%. Looking at the past 5 years, the fund's standard deviation is 4.12% compared to the category average of 10.81%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
If you believe interest rates will rise, this is an important factor to look at. EAFAX has a modified duration of .28, which suggests that the fund will decline 0.28% 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. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 6.8% means that a $10,000 investment should result in a yearly payout of $680.
If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur if rates are lower in the future when compared to the initial purchase date of the bond. Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks.
This fund has a beta of 0.16, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, EAFAX has a positive alpha of 1.94, 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, EAFAX is a load fund. It has an expense ratio of 0.96% compared to the category average of 0.96%. Looking at the fund from a cost perspective, EAFAX is actually on par with its peers.
This fund requires a minimum initial investment of $1,000, while 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, Eaton Vance Floating-Rate Advantage A ( EAFAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and on par fees, this fund looks like a somewhat weak choice for investors right now.
This could just be the start of your research on EAFAX in the High Yield - Bonds 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. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.