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If investors are looking at the Government Mortgage - Intermediate fund category, DoubleLine Total Return Bond I (DBLTX - Free Report) could be a potential option. DBLTX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify DBLTX in the Government Mortgage - Intermediate category, an area full of potential choices. Government Mortgage - Intermediate funds focus on the mortgage-backed securities (MBS) market, which packages mortgages together and then sells off the pooled securities as a MBS. Honing in on MBS'that have at least three years to maturity but less than 10, this fund category presents a medium risk and yield profile.
History of Fund/Manager
Double Line is based in Los Angeles, CA, and is the manager of DBLTX. The DoubleLine Total Return Bond I made its debut in April of 2010 and DBLTX has managed to accumulate roughly $40.95 billion in assets, as of the most recently available information. The fund is currently managed by Philip A. Barach who has been in charge of the fund since April of 2010.
Performance
Investors naturally seek funds with strong performance. DBLTX has a 5-year annualized total return of 2.74% and it sits 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 1.8%, 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. The standard deviation of DBLTX over the past three years is 1.95% compared to the category average of 5.5%. The fund's standard deviation over the past 5 years is 2.15% compared to the category average of 5.56%. 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. DBLTX has a modified duration of 4.12, which suggests that the fund will decline 4.12% 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 3.53% means that a $10,000 investment should result in a yearly payout of $353.
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.
Investors also need to consider risk relative to broad benchmarks, as income is only one part of the bond picture. With a beta of 0.68, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, DBLTX has a positive alpha of 1.23, 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, DBLTX has 71.19% 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
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, DBLTX is a no load fund. It has an expense ratio of 0.47% compared to the category average of 0.84%. From a cost perspective, DBLTX is actually cheaper than its peers.
While the minimum initial investment for the product is $100,000, investors should also note that each subsequent investment needs to be at least $100.
Bottom Line
Overall, DoubleLine Total Return Bond I ( DBLTX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, DoubleLine Total Return Bond I ( DBLTX ) looks like a good potential choice for investors right now.
For additional information on the Government Mortgage - 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 DBLTX 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 DBLTX a Strong Bond Fund Right Now?
If investors are looking at the Government Mortgage - Intermediate fund category, DoubleLine Total Return Bond I (DBLTX - Free Report) could be a potential option. DBLTX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify DBLTX in the Government Mortgage - Intermediate category, an area full of potential choices. Government Mortgage - Intermediate funds focus on the mortgage-backed securities (MBS) market, which packages mortgages together and then sells off the pooled securities as a MBS. Honing in on MBS'that have at least three years to maturity but less than 10, this fund category presents a medium risk and yield profile.
History of Fund/Manager
Double Line is based in Los Angeles, CA, and is the manager of DBLTX. The DoubleLine Total Return Bond I made its debut in April of 2010 and DBLTX has managed to accumulate roughly $40.95 billion in assets, as of the most recently available information. The fund is currently managed by Philip A. Barach who has been in charge of the fund since April of 2010.
Performance
Investors naturally seek funds with strong performance. DBLTX has a 5-year annualized total return of 2.74% and it sits 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 1.8%, 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. The standard deviation of DBLTX over the past three years is 1.95% compared to the category average of 5.5%. The fund's standard deviation over the past 5 years is 2.15% compared to the category average of 5.56%. 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. DBLTX has a modified duration of 4.12, which suggests that the fund will decline 4.12% 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 3.53% means that a $10,000 investment should result in a yearly payout of $353.
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.
Investors also need to consider risk relative to broad benchmarks, as income is only one part of the bond picture. With a beta of 0.68, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, DBLTX has a positive alpha of 1.23, 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, DBLTX has 71.19% 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
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, DBLTX is a no load fund. It has an expense ratio of 0.47% compared to the category average of 0.84%. From a cost perspective, DBLTX is actually cheaper than its peers.
While the minimum initial investment for the product is $100,000, investors should also note that each subsequent investment needs to be at least $100.
Bottom Line
Overall, DoubleLine Total Return Bond I ( DBLTX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, DoubleLine Total Return Bond I ( DBLTX ) looks like a good potential choice for investors right now.
For additional information on the Government Mortgage - 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 DBLTX 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.