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Have you been searching for a Diversified Bonds fund? You might want to begin with PIMCO Income A (PONAX - Free Report) . PONAX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
PONAX 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
PIMCO Funds is based in Newport Beach, CA, and is the manager of PONAX. Since PIMCO Income A made its debut in April of 2007, PONAX has garnered more than $20.04 billion in assets. The fund is currently managed by Daniel J. Ivascyn who has been in charge of the fund since April of 2007.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 4.71%, and is in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 5.18%, 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. PONAX's standard deviation over the past three years is 1.98% compared to the category average of -8.08%. The standard deviation of the fund over the past 5 years is 2.41% compared to the category average of -9.16%. This makes the fund more 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 investors who think interest rates will rise, this is an important factor to consider. PONAX has a modified duration of 3.11, which suggests that the fund will decline 3.11% for every hundred-basis-point increase in interest rates.
Income
It is important to consider the fund's average coupon because income is often a big reason for purchasing a fixed income security. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 3.59% means that a $10,000 investment should result in a yearly payout of $359.
If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur 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 0.32, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, PONAX has a positive alpha of 3.42, 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, PONAX has 25.95% in high quality bonds rated at least 'AA' or higher, while 30.43% are of medium quality, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 33.21%, giving PONAX 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, PONAX is a load fund. It has an expense ratio of 0.90% compared to the category average of 1.79%. From a cost perspective, PONAX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $50.
Bottom Line
Overall, PIMCO Income A ( PONAX ) has a neutral Zacks Mutual Fund rank, strong performance, worse downside risk, and lower fees compared to its peers.
Don't stop here for your research on Diversified Bonds funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare PONAX to its peers 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 PONAX a Strong Bond Fund Right Now?
Have you been searching for a Diversified Bonds fund? You might want to begin with PIMCO Income A (PONAX - Free Report) . PONAX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
PONAX 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
PIMCO Funds is based in Newport Beach, CA, and is the manager of PONAX. Since PIMCO Income A made its debut in April of 2007, PONAX has garnered more than $20.04 billion in assets. The fund is currently managed by Daniel J. Ivascyn who has been in charge of the fund since April of 2007.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 4.71%, and is in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 5.18%, 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. PONAX's standard deviation over the past three years is 1.98% compared to the category average of -8.08%. The standard deviation of the fund over the past 5 years is 2.41% compared to the category average of -9.16%. This makes the fund more 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 investors who think interest rates will rise, this is an important factor to consider. PONAX has a modified duration of 3.11, which suggests that the fund will decline 3.11% for every hundred-basis-point increase in interest rates.
Income
It is important to consider the fund's average coupon because income is often a big reason for purchasing a fixed income security. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 3.59% means that a $10,000 investment should result in a yearly payout of $359.
If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur 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 0.32, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, PONAX has a positive alpha of 3.42, 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, PONAX has 25.95% in high quality bonds rated at least 'AA' or higher, while 30.43% are of medium quality, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 33.21%, giving PONAX 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, PONAX is a load fund. It has an expense ratio of 0.90% compared to the category average of 1.79%. From a cost perspective, PONAX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $50.
Bottom Line
Overall, PIMCO Income A ( PONAX ) has a neutral Zacks Mutual Fund rank, strong performance, worse downside risk, and lower fees compared to its peers.
Don't stop here for your research on Diversified Bonds funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare PONAX to its peers 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.