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Having trouble finding a Diversified Bonds fund? Well, The Osterweis Strategic Income Fund (OSTIX - Free Report) would not be a good potential starting point right now. OSTIX holds a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
OSTIX 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
Osterweis is responsible for OSTIX, and the company is based out of San Francisco, CA. The Osterweis Strategic Income Fund debuted in August of 2002. Since then, OSTIX has accumulated assets of about $5.01 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 4.04%, 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 3.52%, 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. Compared to the category average of 2.79%, the standard deviation of OSTIX over the past three years is 2.43%. Over the past 5 years, the standard deviation of the fund is 3.25% compared to the category average of 3.22%. This makes the fund more 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.
If you believe interest rates will rise, this is an important factor to look at. OSTIX has a modified duration of 1.29, which suggests that the fund will decline 1.29% 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. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 6.33% means that a $10,000 investment should result in a yearly payout of $633.
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.
Since income is just one part of the bond picture, investors need to consider risk relative to broad benchmarks. With a beta of 0.07, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, OSTIX has a positive alpha of 3.08, which measures performance on a risk-adjusted basis.
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, OSTIX is a no load fund. It has an expense ratio of 0.85% compared to the category average of 0.89%. So, OSTIX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $5,000 and that each subsequent investment needs to be at $100.
Bottom Line
Overall, The Osterweis Strategic Income Fund ( OSTIX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
Want even more information about OSTIX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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 OSTIX a Strong Bond Fund Right Now?
Having trouble finding a Diversified Bonds fund? Well, The Osterweis Strategic Income Fund (OSTIX - Free Report) would not be a good potential starting point right now. OSTIX holds a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
OSTIX 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
Osterweis is responsible for OSTIX, and the company is based out of San Francisco, CA. The Osterweis Strategic Income Fund debuted in August of 2002. Since then, OSTIX has accumulated assets of about $5.01 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 4.04%, 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 3.52%, 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. Compared to the category average of 2.79%, the standard deviation of OSTIX over the past three years is 2.43%. Over the past 5 years, the standard deviation of the fund is 3.25% compared to the category average of 3.22%. This makes the fund more 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.
If you believe interest rates will rise, this is an important factor to look at. OSTIX has a modified duration of 1.29, which suggests that the fund will decline 1.29% 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. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 6.33% means that a $10,000 investment should result in a yearly payout of $633.
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.
Since income is just one part of the bond picture, investors need to consider risk relative to broad benchmarks. With a beta of 0.07, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, OSTIX has a positive alpha of 3.08, which measures performance on a risk-adjusted basis.
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, OSTIX is a no load fund. It has an expense ratio of 0.85% compared to the category average of 0.89%. So, OSTIX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $5,000 and that each subsequent investment needs to be at $100.
Bottom Line
Overall, The Osterweis Strategic Income Fund ( OSTIX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
Want even more information about OSTIX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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.