Is FNMIX a Strong Bond Fund Right Now?
Any investors hoping to find a International Bond - Emerging fund could think about starting with Fidelity Advisor New Markets Income (FNMIX). FNMIX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
We note that FNMIX is a International Bond - Emerging option, which is loaded with different choices. International Bond - Emerging funds focus on fixed income securities from a variety of emerging international markets. Typically, investors can expect exposure to economies like China, Brazil, India, South Africa, Indonesia, and many others. These funds are appealing because of their geographic diversification, but this can also mean that currency risk is a factor.
History of Fund/Manager
Fidelity is based in Boston, MA, and is the manager of FNMIX. Fidelity Advisor New Markets Income debuted in May of 1993. Since then, FNMIX has accumulated assets of about $1.85 billion, according to the most recently available information. The fund's current manager, Timothy Gill, has been in charge of the fund since January of 2019.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 4.13%, 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 12.13%, which places it in the top third during this time-frame.
It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.
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. FNMIX's standard deviation over the past three years is 6.36% compared to the category average of 10.11%. Over the past 5 years, the standard deviation of the fund is 8.91% compared to the category average of 12.02%. 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. FNMIX has a modified duration of 5.8, which suggests that the fund will decline 5.8% for every hundred-basis-point increase in interest rates.
With a beta of 0.56, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, FNMIX has a positive alpha of 4.32 , 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, FNMIX has 25.49% in medium quality bonds, with ratings of "A" to "BBB". The fund's junk bond component-bonds rated "BB" or below-is at 51.21%, giving FNMIX 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, FNMIX is a no load fund. It has an expense ratio of 0.75% compared to the category average of 0.93%. So, FNMIX is actually cheaper than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, Fidelity Advisor New Markets Income ( FNMIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity Advisor New Markets Income ( FNMIX ) looks like a good potential choice for investors right now.
For additional information on the International Bond - Emerging 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 FNMIX too for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.
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This article originally published on Zacks Investment Research (zacks.com).
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