Is LFRAX a Strong Bond Fund Right Now?

If investors are looking at the Government - Bonds: Misc fund category, Lord Abbett Floating Rate A (LFRAX) could be a potential option. LFRAX carries 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 LFRAX is a Government - Bonds: Misc option, and this area is loaded with many different choices. Often seen as risk-free assets and described as extremely low-risk from a default perspective, Government - Bonds: Misc funds hold securities issued by the United States' federal government. This category stretches across the curve, meaning the yields and interest rate sensitivity will vary, but a mixed approach can typically result in a medium yield and risk profile.

History of Fund/Manager

Lord Abbett is responsible for LFRAX, and the company is based out of Jersey City, NJ. Since Lord Abbett Floating Rate A made its debut in December of 2007, LFRAX has garnered more than $1.52 billion in assets. The fund's current manager is a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 8.05%, 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 6.55%, 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. Over the past three years, LFRAX's standard deviation comes in at 3.7%, compared to the category average of 13.11%. Over the past 5 years, the standard deviation of the fund is 3.78% compared to the category average of 14.29%. This makes the fund less volatile than its peers over the past half-decade.

With a beta of -0.22, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, LFRAX has a positive alpha of 6.02, which measures performance on a risk-adjusted basis.

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, LFRAX is a load fund. It has an expense ratio of 0.80% compared to the category average of 0.96%. LFRAX 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 $1,500 and that each subsequent investment has no minimum amount.

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

Bottom Line

Overall, Lord Abbett Floating Rate A ( LFRAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and lower fees, Lord Abbett Floating Rate A ( LFRAX ) 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 - Bonds: Misc, make sure to go to www.zacks.com/funds/mutual-funds for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.

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This article originally published on Zacks Investment Research (zacks.com).

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