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If you have been looking for Government - Bonds: Misc funds, it would not be wise to start your search with Lord Abbett Short Duration Income F (LDLFX - Free Report) . LDLFX possesses a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
LDLFX 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 based in Jersey City, NJ, and is the manager of LDLFX. Lord Abbett Short Duration Income F made its debut in September of 2007, and since then, LDLFX has accumulated about $14.91 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 1.71%, 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 1.72%, which places it in the top third during this time-frame.
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. LDLFX's standard deviation over the past three years is 1.27% compared to the category average of 7.92%. Over the past 5 years, the standard deviation of the fund is 1.33% compared to the category average of 7.96%. 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. LDLFX has a modified duration of 1.97, which suggests that the fund will decline 1.97% for every hundred-basis-point increase in interest rates.
Income
Income is often a big reason for purchasing a fixed income security, so it is 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 3.82% means that a $10,000 investment should result in a yearly payout of $382.
While a higher coupon is good for when you want a strong level of current income, it could present 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. This fund has a beta of 0.27, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, LDLFX has a positive alpha of 1.03, 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, LDLFX has 44.6% in high quality bonds rated at least 'AA' or higher, while 40.58% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, 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, LDLFX is a no load fund. It has an expense ratio of 0.49% compared to the category average of 0.82%. So, LDLFX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Bottom Line
Overall, Lord Abbett Short Duration Income F has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
For additional information on the Government - Bonds: Misc 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 LDLFX too 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 LDLFX a Strong Bond Fund Right Now?
If you have been looking for Government - Bonds: Misc funds, it would not be wise to start your search with Lord Abbett Short Duration Income F (LDLFX - Free Report) . LDLFX possesses a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
LDLFX 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 based in Jersey City, NJ, and is the manager of LDLFX. Lord Abbett Short Duration Income F made its debut in September of 2007, and since then, LDLFX has accumulated about $14.91 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 1.71%, 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 1.72%, which places it in the top third during this time-frame.
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. LDLFX's standard deviation over the past three years is 1.27% compared to the category average of 7.92%. Over the past 5 years, the standard deviation of the fund is 1.33% compared to the category average of 7.96%. 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. LDLFX has a modified duration of 1.97, which suggests that the fund will decline 1.97% for every hundred-basis-point increase in interest rates.
Income
Income is often a big reason for purchasing a fixed income security, so it is 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 3.82% means that a $10,000 investment should result in a yearly payout of $382.
While a higher coupon is good for when you want a strong level of current income, it could present 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. This fund has a beta of 0.27, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, LDLFX has a positive alpha of 1.03, 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, LDLFX has 44.6% in high quality bonds rated at least 'AA' or higher, while 40.58% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, 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, LDLFX is a no load fund. It has an expense ratio of 0.49% compared to the category average of 0.82%. So, LDLFX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Bottom Line
Overall, Lord Abbett Short Duration Income F has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
For additional information on the Government - Bonds: Misc 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 LDLFX too 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.