Is PTIAX a Strong Bond Fund Right Now?
Government Bond - Intermediate fund seekers should consider taking a look at Performance Trust Total Return Bond (PTIAX). PTIAX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
Zacks Categorizes PTIAX as Government Bond - Intermediate, which is a segment packed with options. Holding securities issued by the U.S. federal government,Government Bond - Intermediate funds are often seen as risk-free assets and are described as extremely low-risk from a default perspective. These kind of funds carry the risk and return potential that falls between short and long government bonds, and are best suited for those looking to complement an existing core bond portfolio.
History of Fund/Manager
Performance is based in New York, NY, and is the manager of PTIAX. Performance Trust Total Return Bond debuted in August of 2010. Since then, PTIAX has accumulated assets of about $10.35 billion, according to the most recently available information. The fund's current manager is a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. PTIAX has a 5-year annualized total return of 1.13%, 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 5.49%, 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. Compared to the category average of 9.09%, the standard deviation of PTIAX over the past three years is 5.6%. Over the past 5 years, the standard deviation of the fund is 5.78% compared to the category average of 10.52%. 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 investors who think interest rates will rise, this is an important factor to consider. PTIAX has a modified duration of 6.88, which suggests that the fund will decline 6.88% for every hundred-basis-point increase in interest rates.
Income
Income is often a big reason for purchasing a fixed income security, so it is important to consider the fund's average coupon. A fund's average coupon is simply its average payout in a given year. For example, this fund's average coupon of 4.65% means that a $10,000 investment should result in a yearly payout of $465.
While a higher coupon is good for when you want a strong level of current income, it could present a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond. Investors also need to consider risk relative to broad benchmarks, as income is only one part of the bond picture.
This fund has a beta of 0.92, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, PTIAX has a positive alpha of 0.5, 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, PTIAX has 64.82% in high quality bonds rated at least "AA" or higher, while 23.78% are of medium quality, with ratings of "A" to "BBB". The fund has an average quality of AA, and focuses on high 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, PTIAX is a no load fund. It has an expense ratio of 0.76% compared to the category average of 0.84%. So, PTIAX is actually cheaper than its peers from a cost perspective.
This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $500.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, Performance Trust Total Return Bond ( PTIAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Performance Trust Total Return Bond ( PTIAX ) looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Government Bond - Intermediate, make sure to go to www.zacks.com/funds/mutual-funds for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.
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This article originally published on Zacks Investment Research (zacks.com).
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