Is PTIAX a Strong Bond Fund Right Now?

If you have been looking for Government Bond - Intermediate funds, a place to start could be Performance Trust Total Return Bond (PTIAX). PTIAX has 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. Since Performance Trust Total Return Bond made its debut in August of 2010, PTIAX has garnered more than $9.39 billion in assets. The fund is currently managed by a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 1.27%, and it sits in the top 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 3.83%, 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 11.65%, the standard deviation of PTIAX over the past three years is 6.29%. Looking at the past 5 years, the fund's standard deviation is 5.63% compared to the category average of 11.04%. 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, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.

For those that believe interest rates will rise, this is an important factor to consider. PTIAX has a modified duration of 6.45, which suggests that the fund will decline 6.45% for every hundred-basis-point increase in interest rates.

Income

It is important to consider the fund's average coupon because income is often a big reason for purchasing a fixed income security. This metric takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 4.72% means that a $10,000 investment should result in a yearly payout of $472.

A higher coupon is good for those seeking a strong level of current income, but it could also pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.

Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks. PTIAX carries a beta of 0.83, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 1.52, 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 63.7% in high quality bonds rated at least 'AA' or higher, while 24.92% 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

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, PTIAX is a no load fund. It has an expense ratio of 0.73% compared to the category average of 0.86%. Looking at the fund from a cost perspective, PTIAX is actually cheaper than its peers.

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 considiration. 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, better downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

Want even more information about PTIAX? 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. 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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