Is GTRAX a Strong Bond Fund Right Now?

On the lookout for a Diversified Bonds fund? Starting with PGIM Global Total Return A (GTRAX) should not be a possibility at this time. GTRAX holds a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.

Objective

We classify GTRAX in the Diversified Bonds category, an area that is rife with potential choices. Diversified Bonds funds offer exposure to a wide variety of fixed income types, stretching across various issuers, credit levels, and maturities. Generally speaking, bond funds here will have sizable exposure to government debt, as well as modest holdings in the corporate bond market too.

History of Fund/Manager

PGIM is responsible for GTRAX, and the company is based out of Providence, RI. PGIM Global Total Return A debuted in July of 1986. Since then, GTRAX has accumulated assets of about $163.15 million, according to the most recently available information. The fund's current manager is a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. GTRAX has a 5-year annualized total return of -1.15% and it sits in the bottom 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 2.86%, 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. GTRAX's standard deviation over the past three years is 9.68% compared to the category average of 12.81%. Looking at the past 5 years, the fund's standard deviation is 9.35% compared to the category average of 12.43%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.78, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, GTRAX has a positive alpha of 1.23, 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, GTRAX has 32.86% in high quality bonds rated at least 'AA' or higher, while 52.1% 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

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, GTRAX is a load fund. It has an expense ratio of 0.88% compared to the category average of 0.93%. GTRAX is actually cheaper than its peers when you consider factors like cost.

Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $100

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, PGIM Global Total Return A ( GTRAX ) has a low Zacks Mutual Fund rank, and therefore looks a somewhat weak choice for investors right now.

Your research on the Diversified Bonds 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. 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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