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Any investors hoping to find an International Bond - Emerging fund could think about starting with T. Rowe Price Emerging Markets Bond (PREMX - Free Report) . PREMX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We note that PREMX is an International Bond - Emerging option, which is loaded with different choices. International Bond - Emerging funds focus on fixed income securities from a variety of emerging international markets. Typically, investors can expect exposure to economies like China, Brazil, India, South Africa, Indonesia, and many others. These funds are appealing because of their geographic diversification, but this can also mean that currency risk is a factor.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of PREMX. Since T. Rowe Price Emerging Markets Bond made its debut in December of 1994, PREMX has garnered more than $4.30 billion in assets. The fund is currently managed by Michael J. Conelius who has been in charge of the fund since December of 1994.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 3.68%, 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 3.84%, 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. PREMX's standard deviation over the past three years is 6.89% compared to the category average of 8.13%. Over the past 5 years, the standard deviation of the fund is 6.64% compared to the category average of 8.16%. 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 those that believe interest rates will rise, this is an important factor to consider. PREMX has a modified duration of 6.26, which suggests that the fund will decline 6.26% 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 6.71% means that a $10,000 investment should result in a yearly payout of $671.
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.
Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks. This fund has a beta of 1.22, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, PREMX has a positive alpha of 1.96, 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, PREMX has 29.96% in medium quality bonds, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 64.9%, giving PREMX an average quality of BBB. This means that it focuses on medium 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, PREMX is a no load fund. It has an expense ratio of 0.91% compared to the category average of 1.17%. From a cost perspective, PREMX is actually cheaper than its peers.
While the minimum initial investment for the product is $2,500, investors should also note that each subsequent investment needs to be at least $100.
Bottom Line
Overall, T. Rowe Price Emerging Markets Bond ( PREMX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, T. Rowe Price Emerging Markets Bond ( PREMX ) looks like a good potential choice for investors right now.
Your research on the International Bond - Emerging segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well 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 PREMX a Strong Bond Fund Right Now?
Any investors hoping to find an International Bond - Emerging fund could think about starting with T. Rowe Price Emerging Markets Bond (PREMX - Free Report) . PREMX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We note that PREMX is an International Bond - Emerging option, which is loaded with different choices. International Bond - Emerging funds focus on fixed income securities from a variety of emerging international markets. Typically, investors can expect exposure to economies like China, Brazil, India, South Africa, Indonesia, and many others. These funds are appealing because of their geographic diversification, but this can also mean that currency risk is a factor.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of PREMX. Since T. Rowe Price Emerging Markets Bond made its debut in December of 1994, PREMX has garnered more than $4.30 billion in assets. The fund is currently managed by Michael J. Conelius who has been in charge of the fund since December of 1994.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 3.68%, 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 3.84%, 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. PREMX's standard deviation over the past three years is 6.89% compared to the category average of 8.13%. Over the past 5 years, the standard deviation of the fund is 6.64% compared to the category average of 8.16%. 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 those that believe interest rates will rise, this is an important factor to consider. PREMX has a modified duration of 6.26, which suggests that the fund will decline 6.26% 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 6.71% means that a $10,000 investment should result in a yearly payout of $671.
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.
Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks. This fund has a beta of 1.22, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, PREMX has a positive alpha of 1.96, 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, PREMX has 29.96% in medium quality bonds, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 64.9%, giving PREMX an average quality of BBB. This means that it focuses on medium 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, PREMX is a no load fund. It has an expense ratio of 0.91% compared to the category average of 1.17%. From a cost perspective, PREMX is actually cheaper than its peers.
While the minimum initial investment for the product is $2,500, investors should also note that each subsequent investment needs to be at least $100.
Bottom Line
Overall, T. Rowe Price Emerging Markets Bond ( PREMX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, T. Rowe Price Emerging Markets Bond ( PREMX ) looks like a good potential choice for investors right now.
Your research on the International Bond - Emerging segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well 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.