Is PTIAX a Strong Bond Fund Right Now?
There are plenty of choices in the Government Bond - Intermediate category, but where should you start your research? Well, one fund that might be worth investigating is Performance Trust Total Return Bond (PTIAX). PTIAX holds 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
PTIAX is a part of the Performance family of funds, a company based out of New York, NY. Since Performance Trust Total Return Bond made its debut in August of 2010, PTIAX has garnered more than $10.04 billion in assets. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 1.08%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 5.96%, 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. PTIAX's standard deviation over the past three years is 5.35% compared to the category average of 9.39%. Over the past 5 years, the standard deviation of the fund is 5.54% compared to the category average of 10.44%. 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.
If you believe interest rates will rise, this is an important factor to look at. 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
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. This metric calculates the fund's average payout 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.
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. Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks.
With a beta of 0.82, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, PTIAX has a positive alpha of 0.91 , 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
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, PTIAX is a no load fund and it has an expense ratio of 0.75%.
Investors should also note that the minimum initial investment for the product is $2,500 and that each subsequent investment needs to be at $500.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
This puts this fund from Performance in the top 20% of all mutual funds we have a rank on right now. As a result, this is likely an excellent choice for investors seeking an option in the Government Bond - Intermediate category.
For additional information on the Government Bond - Intermediate area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into PTIAX too for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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This article originally published on Zacks Investment Research (zacks.com).
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