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If you have been looking for Diversified Bonds funds, a place to start could be Fidelity Total Bond (FTBFX - Free Report) . FTBFX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
FTBFX 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
FTBFX is a part of the Fidelity family of funds, a company based out of Boston, MA. The Fidelity Total Bond made its debut in October of 2002 and FTBFX has managed to accumulate roughly $13.55 billion in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 3.52%, and is 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 3.03%, which places it in the middle 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, FTBFX's standard deviation comes in at 2.65%, compared to the category average of 8.21%. Looking at the past 5 years, the fund's standard deviation is 2.85% compared to the category average of 8.4%. 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, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
If you believe interest rates will rise, this is an important factor to look at. FTBFX 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
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. A fund's average coupon is simply its average payout in a given year. For example, this fund's average coupon of 3.63% means that a $10,000 investment should result in a yearly payout of $363.
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. FTBFX carries a beta of 0.83, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 0.71, 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, FTBFX has 57.01% in high quality bonds rated at least 'AA' or higher, while 29.98% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of AA, and focuses on high quality securities.
Expenses
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, FTBFX is a no load fund. It has an expense ratio of 0.45% compared to the category average of 0.89%. So, FTBFX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Bottom Line
Overall, Fidelity Total Bond ( FTBFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, Fidelity Total Bond ( FTBFX ) looks like a good potential choice for investors right now.
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 FTBFX 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 FTBFX a Strong Bond Fund Right Now?
If you have been looking for Diversified Bonds funds, a place to start could be Fidelity Total Bond (FTBFX - Free Report) . FTBFX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
FTBFX 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
FTBFX is a part of the Fidelity family of funds, a company based out of Boston, MA. The Fidelity Total Bond made its debut in October of 2002 and FTBFX has managed to accumulate roughly $13.55 billion in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 3.52%, and is 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 3.03%, which places it in the middle 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, FTBFX's standard deviation comes in at 2.65%, compared to the category average of 8.21%. Looking at the past 5 years, the fund's standard deviation is 2.85% compared to the category average of 8.4%. 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, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
If you believe interest rates will rise, this is an important factor to look at. FTBFX 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
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. A fund's average coupon is simply its average payout in a given year. For example, this fund's average coupon of 3.63% means that a $10,000 investment should result in a yearly payout of $363.
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. FTBFX carries a beta of 0.83, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 0.71, 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, FTBFX has 57.01% in high quality bonds rated at least 'AA' or higher, while 29.98% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of AA, and focuses on high quality securities.
Expenses
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, FTBFX is a no load fund. It has an expense ratio of 0.45% compared to the category average of 0.89%. So, FTBFX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Bottom Line
Overall, Fidelity Total Bond ( FTBFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, Fidelity Total Bond ( FTBFX ) looks like a good potential choice for investors right now.
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 FTBFX 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.