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Any investors hoping to find a Diversified Bonds fund could think about starting with Fidelity Strategic Income (FADMX - Free Report) . FADMX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
The world of Diversified Bonds funds is an area filled with options, such as FADMX. Investors looking for exposure to a variety of fixed income types that stretch across issuers, maturities, and credit levels will find a good fit with Diversified Bonds funds. Typically, these funds have a solid amount of exposure to government debt, as well as modest holdings in the corporate bond market.
History of Fund/Manager
FADMX finds itself in the Fidelity family, based out of Boston, MA. The Fidelity Strategic Income made its debut in May of 1998 and FADMX has managed to accumulate roughly $5.68 billion in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 2.94%, and it sits in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 7.56%, 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. The standard deviation of FADMX over the past three years is 4.8% compared to the category average of 10%. The standard deviation of the fund over the past 5 years is 5.94% compared to the category average of 11.61%. 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.
For those that believe interest rates will rise, this is an important factor to consider. FADMX has a modified duration of 4.2, which suggests that the fund will decline 4.2% for every hundred-basis-point increase in interest rates.
With a beta of 0.6, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, FADMX has a positive alpha of 2.43 , 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, FADMX has 33.8% in high quality bonds rated at least "AA" or higher, while its junk bond component-bonds rated "BB" or below-is at 34.3%. This means that the fund has an average quality of BBB, and focuses on medium quality securities.
However, it is worth noting that 22% of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.
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, FADMX is a no load fund. It has an expense ratio of 0.64% compared to the category average of 0.93%. From a cost perspective, FADMX is actually cheaper than its peers.
While the minimum initial investment for the product is $0, 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, Fidelity Strategic Income ( FADMX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and lower fees, Fidelity Strategic Income ( FADMX ) looks like a good potential choice for investors right now.
For additional information on the Diversified Bonds 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 FADMX too for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
View the Zacks #1 Rank List
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Is FADMX a Strong Bond Fund Right Now?
Any investors hoping to find a Diversified Bonds fund could think about starting with Fidelity Strategic Income (FADMX - Free Report) . FADMX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
The world of Diversified Bonds funds is an area filled with options, such as FADMX. Investors looking for exposure to a variety of fixed income types that stretch across issuers, maturities, and credit levels will find a good fit with Diversified Bonds funds. Typically, these funds have a solid amount of exposure to government debt, as well as modest holdings in the corporate bond market.
History of Fund/Manager
FADMX finds itself in the Fidelity family, based out of Boston, MA. The Fidelity Strategic Income made its debut in May of 1998 and FADMX has managed to accumulate roughly $5.68 billion in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 2.94%, and it sits in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 7.56%, 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. The standard deviation of FADMX over the past three years is 4.8% compared to the category average of 10%. The standard deviation of the fund over the past 5 years is 5.94% compared to the category average of 11.61%. 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.
For those that believe interest rates will rise, this is an important factor to consider. FADMX has a modified duration of 4.2, which suggests that the fund will decline 4.2% for every hundred-basis-point increase in interest rates.
With a beta of 0.6, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, FADMX has a positive alpha of 2.43 , 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, FADMX has 33.8% in high quality bonds rated at least "AA" or higher, while its junk bond component-bonds rated "BB" or below-is at 34.3%. This means that the fund has an average quality of BBB, and focuses on medium quality securities.However, it is worth noting that 22% of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.
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, FADMX is a no load fund. It has an expense ratio of 0.64% compared to the category average of 0.93%. From a cost perspective, FADMX is actually cheaper than its peers.
While the minimum initial investment for the product is $0, 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, Fidelity Strategic Income ( FADMX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and lower fees, Fidelity Strategic Income ( FADMX ) looks like a good potential choice for investors right now.
For additional information on the Diversified Bonds 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 FADMX too for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.