Is PIGIX a Strong Bond Fund Right Now?
If you have been looking for Diversified Bonds funds, a place to start could be PIMCO Investment Grade Corporate Institutional (PIGIX). PIGIX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
PIGIX 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
PIGIX finds itself in the PIMCO Funds family, based out of Newport Beach, CA. PIMCO Investment Grade Corporate Institutional made its debut in March of 2000, and since then, PIGIX has accumulated about $5.61 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.
Performance
Of course, investors look for strong performance in funds. PIGIX has a 5-year annualized total return of 0.74%, and is in the middle 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 4.92%, which places it in the middle 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. PIGIX's standard deviation over the past three years is 6.57% compared to the category average of 10.05%. Over the past 5 years, the standard deviation of the fund is 7.51% compared to the category average of 11.77%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
For those that believe interest rates will rise, this is an important factor to consider. PIGIX has a modified duration of 7.12, which suggests that the fund will decline 7.12% for every hundred-basis-point increase in interest rates.
With a beta of 0.99, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, PIGIX has a positive alpha of 1.12 , 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, PIGIX has 38.3% in high quality bonds rated at least "AA" or higher, while 57.4% are of medium quality, with ratings of "A" to "BBB". The fund has an average quality of A, 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, PIGIX is a no load fund. It has an expense ratio of 0.50% compared to the category average of 0.87%. PIGIX is actually cheaper than its peers when you consider factors like cost.
This fund requires a minimum initial investment of $1.00 million, while there is no minimum for each subsequent investment.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, PIMCO Investment Grade Corporate Institutional ( PIGIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
Want even more information about PIGIX? 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. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.
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This article originally published on Zacks Investment Research (zacks.com).
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