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If you have been looking for Diversified Bonds fund category, a potential starting could be PIMCO Income P (PONPX - Free Report) . PONPX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
PONPX 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 responsible for PONPX, and the company is based out of Newport Beach, CA. The PIMCO Income P made its debut in May of 2008 and PONPX has managed to accumulate roughly $32.93 billion in assets, as of the most recently available information. The fund's current manager is 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 4.63%, 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 4.87%, 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. PONPX's standard deviation over the past three years is 1.91% compared to the category average of 8.51%. The standard deviation of the fund over the past 5 years is 2.36% compared to the category average of 8.69%. This makes the fund less 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 those that believe interest rates will rise, this is an important factor to consider. PONPX has a modified duration of 1.96, which suggests that the fund will decline 1.96% 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 3.73% means that a $10,000 investment should result in a yearly payout of $373.
For those seeking a strong level of current income, a higher coupon is typically good news. However, it could 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. With a beta of 0.13, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, PONPX has a positive alpha of 3.32, 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, PONPX has 27.06% in high quality bonds rated at least 'AA' or higher, while 31.55% are of medium quality, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 35.42%, giving PONPX 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, PONPX is a no load fund. It has an expense ratio of 0.60% compared to the category average of 0.90%. So, PONPX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $1 million and that each subsequent investment has no minimum amount.
Bottom Line
Overall, PIMCO Income P ( PONPX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, PIMCO Income P ( PONPX ) looks like a somewhat average choice for investors right now.
For additional information on the Diversified Bonds area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into PONPX too for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.
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Is PONPX a Strong Bond Fund Right Now?
If you have been looking for Diversified Bonds fund category, a potential starting could be PIMCO Income P (PONPX - Free Report) . PONPX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
PONPX 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 responsible for PONPX, and the company is based out of Newport Beach, CA. The PIMCO Income P made its debut in May of 2008 and PONPX has managed to accumulate roughly $32.93 billion in assets, as of the most recently available information. The fund's current manager is 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 4.63%, 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 4.87%, 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. PONPX's standard deviation over the past three years is 1.91% compared to the category average of 8.51%. The standard deviation of the fund over the past 5 years is 2.36% compared to the category average of 8.69%. This makes the fund less 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 those that believe interest rates will rise, this is an important factor to consider. PONPX has a modified duration of 1.96, which suggests that the fund will decline 1.96% 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 3.73% means that a $10,000 investment should result in a yearly payout of $373.
For those seeking a strong level of current income, a higher coupon is typically good news. However, it could 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. With a beta of 0.13, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, PONPX has a positive alpha of 3.32, 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, PONPX has 27.06% in high quality bonds rated at least 'AA' or higher, while 31.55% are of medium quality, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 35.42%, giving PONPX 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, PONPX is a no load fund. It has an expense ratio of 0.60% compared to the category average of 0.90%. So, PONPX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $1 million and that each subsequent investment has no minimum amount.
Bottom Line
Overall, PIMCO Income P ( PONPX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, PIMCO Income P ( PONPX ) looks like a somewhat average choice for investors right now.
For additional information on the Diversified Bonds area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into PONPX too for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.