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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 has a Zacks Mutual Fund Rank of 1 (Strong Buy), 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 $665.41 million in assets, per the most up-to-date date available. Kenneth A. Orchard is the fund's current manager and has held that role since January of 2018.
Performance
Of course, investors look for strong performance in funds. PRSNX has a 5-year annualized total return of 3.68% 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 4.52%, 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. Compared to the category average of 6.93%, the standard deviation of PRSNX over the past three years is 2.73%. The standard deviation of the fund over the past 5 years is 3.06% compared to the category average of 7.24%. 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 investors who think interest rates will rise, this is an important factor to consider. PRSNX has a modified duration of 5.36, which suggests that the fund will decline 5.36% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally 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 4.82% means that a $10,000 investment should result in a yearly payout of $482.
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.
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 0.69, 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 1.62, 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 34.05% in high quality bonds rated at least 'AA' or higher, while 34.04% are of medium quality, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 25.67%, giving PRSNX an average quality of A. This means that it 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 0.61% compared to the category average of 0.90%. From a cost perspective, PRSNX is actually cheaper than its peers.
This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $100.
Bottom Line
Overall, T. Rowe Price Global Multi-Sector Bond Investor ( PRSNX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
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. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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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 has a Zacks Mutual Fund Rank of 1 (Strong Buy), 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 $665.41 million in assets, per the most up-to-date date available. Kenneth A. Orchard is the fund's current manager and has held that role since January of 2018.
Performance
Of course, investors look for strong performance in funds. PRSNX has a 5-year annualized total return of 3.68% 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 4.52%, 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. Compared to the category average of 6.93%, the standard deviation of PRSNX over the past three years is 2.73%. The standard deviation of the fund over the past 5 years is 3.06% compared to the category average of 7.24%. 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 investors who think interest rates will rise, this is an important factor to consider. PRSNX has a modified duration of 5.36, which suggests that the fund will decline 5.36% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally 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 4.82% means that a $10,000 investment should result in a yearly payout of $482.
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.
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 0.69, 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 1.62, 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 34.05% in high quality bonds rated at least 'AA' or higher, while 34.04% are of medium quality, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 25.67%, giving PRSNX an average quality of A. This means that it 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 0.61% compared to the category average of 0.90%. From a cost perspective, PRSNX is actually cheaper than its peers.
This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $100.
Bottom Line
Overall, T. Rowe Price Global Multi-Sector Bond Investor ( PRSNX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
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. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.