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International Bond - Emerging fund seekers should not consider taking a look at T. Rowe Price Emerging Markets Bond (PREMX - Free Report) at this time. PREMX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
PREMX is part of the International Bond - Emerging section, a segment that boasts an impressive array of other possible selections. International Bond - Emerging funds offer a unique type of geographic diversification by focusing on fixed income securities from emerging nations around the globe. With these funds, investors can expect exposure to economies such as China, Brazil, India, South Africa, and Indonesia, just to name a few. While this can be appealing, these funds can also introduce currency risk.
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 $4.67 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. PREMX has a 5-year annualized total return of 4.07% 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 3.82%, 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. Over the past three years, PREMX's standard deviation comes in at 6.44%, compared to the category average of -18.94%. The fund's standard deviation over the past 5 years is 6.85% compared to the category average of -20.6%. 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. PREMX has a modified duration of 7.72, which suggests that the fund will decline 7.72% 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 6.54% means that a $10,000 investment should result in a yearly payout of $654.
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.
Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks. PREMX carries a beta of 0.61, 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 1.8, 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 33.09% in medium quality bonds, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 63.88%, 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 0.90% compared to the category average of 0.52%. So, PREMX is actually more expensive than its peers from a cost perspective.
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 Emerging Markets Bond ( PREMX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, T. Rowe Price Emerging Markets Bond ( PREMX ) looks like a poor potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the International Bond - Emerging, make sure to go to www.zacks.com/funds/mutual-funds 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?
International Bond - Emerging fund seekers should not consider taking a look at T. Rowe Price Emerging Markets Bond (PREMX - Free Report) at this time. PREMX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
PREMX is part of the International Bond - Emerging section, a segment that boasts an impressive array of other possible selections. International Bond - Emerging funds offer a unique type of geographic diversification by focusing on fixed income securities from emerging nations around the globe. With these funds, investors can expect exposure to economies such as China, Brazil, India, South Africa, and Indonesia, just to name a few. While this can be appealing, these funds can also introduce currency risk.
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 $4.67 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. PREMX has a 5-year annualized total return of 4.07% 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 3.82%, 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. Over the past three years, PREMX's standard deviation comes in at 6.44%, compared to the category average of -18.94%. The fund's standard deviation over the past 5 years is 6.85% compared to the category average of -20.6%. 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. PREMX has a modified duration of 7.72, which suggests that the fund will decline 7.72% 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 6.54% means that a $10,000 investment should result in a yearly payout of $654.
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.
Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks. PREMX carries a beta of 0.61, 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 1.8, 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 33.09% in medium quality bonds, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 63.88%, 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 0.90% compared to the category average of 0.52%. So, PREMX is actually more expensive than its peers from a cost perspective.
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 Emerging Markets Bond ( PREMX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, T. Rowe Price Emerging Markets Bond ( PREMX ) looks like a poor potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the International Bond - Emerging, make sure to go to www.zacks.com/funds/mutual-funds 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.