Is MWTIX a Strong Bond Fund Right Now?

If investors are looking at the Diversified Bonds fund category, make sure to pass over Metropolitan West Total Retail Bond I (MWTIX). MWTIX possesses a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on various forecasting factors like size, cost, and past performance.

Objective

The world of Diversified Bonds funds is an area filled with options, such as MWTIX. Investors looking for exposure to a variety of fixed income types that stretch across issuers, maturities, and credit levels will find a good fit with Diversified Bonds funds. Typically, these funds have a solid amount of exposure to government debt, as well as modest holdings in the corporate bond market.

History of Fund/Manager

TCW is based in Los Angeles, CA, and is the manager of MWTIX. Since Metropolitan West Total Retail Bond I made its debut in April of 2000, MWTIX has garnered more than $20.48 billion in assets. A team of investment professionals is the fund's current manager.

Performance

Investors naturally seek funds with strong performance. MWTIX has a 5-year annualized total return of -0.9% and is in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 1.23%, which places it in the bottom 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. The standard deviation of MWTIX over the past three years is 8.38% compared to the category average of 12.46%. The standard deviation of the fund over the past 5 years is 7.09% compared to the category average of 12.04%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 1.13, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, MWTIX has a positive alpha of 0.51, 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, MWTIX has 78.21% in high quality bonds rated at least 'AA' or higher. The fund has an average quality of AA, and focuses on high quality securities.

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, MWTIX is a no load fund. It has an expense ratio of 0.45% compared to the category average of 0.89%. MWTIX is actually cheaper than its peers when you consider factors like cost.

This fund requires a minimum initial investment of $3 million, and each subsequent investment should be at least $50,000.

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, even with its comparatively weak performance, average downside risk, and lower fees, Metropolitan West Total Retail Bond I ( MWTIX ) has a low Zacks Mutual Fund rank, and therefore looks a somewhat weak choice for investors right now.

Want even more information about MWTIX? 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. 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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This article originally published on Zacks Investment Research (zacks.com).

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