Investment Grade Bond - Intermediate fund seekers should consider taking a look at PIMCO Total Return Institutional (
PTTRX Quick Quote PTTRX - Free Report) . PTTRX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance. Objective
We note that PTTRX is an Investment Grade Bond - Intermediate option, which is a segment loaded with many different investment options. By targeting bonds that mature in more than three years but less than 15 years, Investment Grade Bond - Intermediate funds are a middle of the curve option. Fixed income instruments at this maturity level usually have medium duration risk, but their yields are respectable, especially in comparison to their short-maturity counterparts. Additionally, a focus on investment grade makes these funds safer, but yields tend to be lower than in the junk bond category.
History of Fund/Manager
PIMCO Funds is based in Newport Beach, CA, and is the manager of PTTRX. The PIMCO Total Return Institutional made its debut in May of 1987 and PTTRX has managed to accumulate roughly $51.76 billion in assets, as of the most recently available information. A team of investment professionals is the fund's current manager.
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 3.24%, 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 4.51%, 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 11.16%, the standard deviation of PTTRX over the past three years is 3.24%. Over the past 5 years, the standard deviation of the fund is 3.2% compared to the category average of 10.22%. This makes the fund less volatile than its peers over the past half-decade.
With a beta of 0.97, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, PTTRX has a positive alpha of 0.02, which measures performance on a risk-adjusted basis.
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, PTTRX has 73% in high quality bonds rated at least 'AA' or higher, while 21% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of AA, and focuses on high quality securities.
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, PTTRX is a no load fund. It has an expense ratio of 0.46% compared to the category average of 0.82%. PTTRX is actually cheaper than its peers when you consider factors like cost.
While the minimum initial investment for the product is $1 million, investors should also note that there is no minimum for each subsequent investment.
Overall, PIMCO Total Return Institutional ( PTTRX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
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