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Investment Grade Bond - Intermediate fund seekers should consider taking a look at PIMCO Total Return Institutional (PTTRX - Free Report) . PTTRX 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 PTTRX in the Investment Grade Bond - Intermediate category, an area rife with potential choices. Investment Grade Bond - Intermediate funds target the middle part of the curve, typically by investing in bonds that mature in more than three years but less than 15 years. At these maturity levels, fixed income instruments have medium duration risk--but they compensate investors with a respectable yield compared to shorter maturity options. Finally, a focus on investment grade ensures that these funds are safer, but yields will be lower than in the junk bond category.
History of Fund/Manager
PIMCO Funds is responsible for PTTRX, and the company is based out of Newport Beach, CA. PIMCO Total Return Institutional debuted in May of 1987. Since then, PTTRX has accumulated assets of about $33.71 billion, according to the most recently available information. 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. PTTRX has a 5-year annualized total return of -0.24%, and it sits in the middle 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 5%, 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. Compared to the category average of 10.13%, the standard deviation of PTTRX over the past three years is 6.48%. The standard deviation of the fund over the past 5 years is 6.9% compared to the category average of 11.98%. 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, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.
For investors who think interest rates will rise, this is an important factor to consider. PTTRX has a modified duration of 6.51, which suggests that the fund will decline 6.51% for every hundred-basis-point increase in interest rates.
This fund has a beta of 1.04, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, PTTRX has a positive alpha of 0.64, 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, PTTRX has 74.3% in high quality bonds rated at least "AA" or higher. The fund has an average quality of AA, 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, PTTRX is a no load fund. It has an expense ratio of 0.46% compared to the category average of 0.90%. From a cost perspective, PTTRX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $1.00 million and that each subsequent investment has no minimum amount.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, PIMCO Total Return Institutional ( PTTRX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
For additional information on the Investment Grade Bond - Intermediate 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 PTTRX 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.
View the Zacks #1 Rank List
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Is PTTRX a Strong Bond Fund Right Now?
Investment Grade Bond - Intermediate fund seekers should consider taking a look at PIMCO Total Return Institutional (PTTRX - Free Report) . PTTRX 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 PTTRX in the Investment Grade Bond - Intermediate category, an area rife with potential choices. Investment Grade Bond - Intermediate funds target the middle part of the curve, typically by investing in bonds that mature in more than three years but less than 15 years. At these maturity levels, fixed income instruments have medium duration risk--but they compensate investors with a respectable yield compared to shorter maturity options. Finally, a focus on investment grade ensures that these funds are safer, but yields will be lower than in the junk bond category.
History of Fund/Manager
PIMCO Funds is responsible for PTTRX, and the company is based out of Newport Beach, CA. PIMCO Total Return Institutional debuted in May of 1987. Since then, PTTRX has accumulated assets of about $33.71 billion, according to the most recently available information. 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. PTTRX has a 5-year annualized total return of -0.24%, and it sits in the middle 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 5%, 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. Compared to the category average of 10.13%, the standard deviation of PTTRX over the past three years is 6.48%. The standard deviation of the fund over the past 5 years is 6.9% compared to the category average of 11.98%. 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, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.
For investors who think interest rates will rise, this is an important factor to consider. PTTRX has a modified duration of 6.51, which suggests that the fund will decline 6.51% for every hundred-basis-point increase in interest rates.
This fund has a beta of 1.04, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, PTTRX has a positive alpha of 0.64, 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, PTTRX has 74.3% in high quality bonds rated at least "AA" or higher. The fund has an average quality of AA, 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, PTTRX is a no load fund. It has an expense ratio of 0.46% compared to the category average of 0.90%. From a cost perspective, PTTRX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $1.00 million and that each subsequent investment has no minimum amount.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, PIMCO Total Return Institutional ( PTTRX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
For additional information on the Investment Grade Bond - Intermediate 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 PTTRX 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.