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Any investors hoping to find a Diversified Bonds fund could think about starting with T. Rowe Price Global Multi-Sector Bond Investor (PRSNX - Free Report) . PRSNX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
PRSNX is one of many Diversified Bonds funds to choose from. Diversified Bonds funds give investors exposure to a variety of fixed income types that span across different issuers, maturities, and credit levels. Usually, these funds will have a good amount of exposure to government debt, in addition to modest holdings in the corporate bond market.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of PRSNX. T. Rowe Price Global Multi-Sector Bond Investor made its debut in December of 2008, and since then, PRSNX has accumulated about $622.56 million in assets, per the most up-to-date date available. Steven C. Huber is the fund's current manager and has held that role since December of 2008.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 3.07%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 3.69%, 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. Over the past three years, PRSNX's standard deviation comes in at 2.82%, compared to the category average of 5.78%. Over the past 5 years, the standard deviation of the fund is 3.03% compared to the category average of 5.88%. 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.
If you believe interest rates will rise, this is an important factor to look at. PRSNX has a modified duration of 5.38, which suggests that the fund will decline 5.38% 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 takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 4.74% means that a $10,000 investment should result in a yearly payout of $474.
A higher coupon is good for those seeking a strong level of current income, but it could also pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks. This fund has a beta of 0.76, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, PRSNX has a positive alpha of 1.63, 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, PRSNX has 43.81% in high quality bonds rated at least 'AA' or higher, while 42.09% 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, PRSNX is a no load fund. It has an expense ratio of 0.60% compared to the category average of 0.91%. PRSNX is actually cheaper than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment needs to be at least $100.
Bottom Line
Overall, T. Rowe Price Global Multi-Sector Bond Investor ( PRSNX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, T. Rowe Price Global Multi-Sector Bond Investor ( PRSNX ) looks like a somewhat average choice for investors right now.
This could just be the start of your research on PRSNXin the Diversified 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. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.
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Is PRSNX a Strong Bond Fund Right Now?
Any investors hoping to find a Diversified Bonds fund could think about starting with T. Rowe Price Global Multi-Sector Bond Investor (PRSNX - Free Report) . PRSNX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
PRSNX is one of many Diversified Bonds funds to choose from. Diversified Bonds funds give investors exposure to a variety of fixed income types that span across different issuers, maturities, and credit levels. Usually, these funds will have a good amount of exposure to government debt, in addition to modest holdings in the corporate bond market.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of PRSNX. T. Rowe Price Global Multi-Sector Bond Investor made its debut in December of 2008, and since then, PRSNX has accumulated about $622.56 million in assets, per the most up-to-date date available. Steven C. Huber is the fund's current manager and has held that role since December of 2008.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 3.07%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 3.69%, 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. Over the past three years, PRSNX's standard deviation comes in at 2.82%, compared to the category average of 5.78%. Over the past 5 years, the standard deviation of the fund is 3.03% compared to the category average of 5.88%. 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.
If you believe interest rates will rise, this is an important factor to look at. PRSNX has a modified duration of 5.38, which suggests that the fund will decline 5.38% 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 takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 4.74% means that a $10,000 investment should result in a yearly payout of $474.
A higher coupon is good for those seeking a strong level of current income, but it could also pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks. This fund has a beta of 0.76, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, PRSNX has a positive alpha of 1.63, 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, PRSNX has 43.81% in high quality bonds rated at least 'AA' or higher, while 42.09% 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, PRSNX is a no load fund. It has an expense ratio of 0.60% compared to the category average of 0.91%. PRSNX is actually cheaper than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment needs to be at least $100.
Bottom Line
Overall, T. Rowe Price Global Multi-Sector Bond Investor ( PRSNX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, T. Rowe Price Global Multi-Sector Bond Investor ( PRSNX ) looks like a somewhat average choice for investors right now.
This could just be the start of your research on PRSNXin the Diversified 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. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.