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Is FGMNX a Strong Bond Fund Right Now?

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There are plenty of choices in the Government Mortgage - Intermediate category, but where should you start your research? Well, one fund that you should consider investigating is Fidelity GNMA Fund (FGMNX - Free Report) . FGMNX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify FGMNX in the Government Mortgage - Intermediate category, an area full of potential choices. Government Mortgage - Intermediate funds focus on the mortgage-backed securities (MBS) market, which packages mortgages together and then sells off the pooled securities as a MBS. Honing in on MBS'that have at least three years to maturity but less than 10, this fund category presents a medium risk and yield profile.

History of Fund/Manager

FGMNX finds itself in the Fidelity family, based out of Boston, MA. The Fidelity GNMA Fund made its debut in November of 1985 and FGMNX has managed to accumulate roughly $4.14 billion in assets, as of the most recently available information. The fund is currently managed by Franco Castagliuolo who has been in charge of the fund since December of 2009.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 2.56%, and is 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 3.4%, 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. FGMNX's standard deviation over the past three years is 2.05% compared to the category average of 3.08%. Looking at the past 5 years, the fund's standard deviation is 1.92% compared to the category average of 2.93%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.47, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, FGMNX has a positive alpha of 0.09, 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, FGMNX is a no load fund. It has an expense ratio of 0.45% compared to the category average of 0.79%. So, FGMNX is actually cheaper than its peers from a cost perspective.

This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.

Bottom Line

Overall, Fidelity GNMA Fund ( FGMNX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity GNMA Fund ( FGMNX ) looks like a somewhat average choice for investors right now.

Your research on the Government Mortgage - Intermediate segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.


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