Is TRBUX a Strong Bond Fund Right Now?

On the lookout for an Investment Grade Bond - Short fund? Starting with T. Rowe Price Ultra Short-Term Bond (TRBUX) is one possibility. TRBUX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

TRBUX is part of the Investment Grade Bond - Short category, a segment that boasts an array of other possible selections. Investment Grade Bond - Short funds target the short end of the curve by focusing on bonds that mature in less than two years. Fixed income instruments with this maturity level typically have low duration risk and pay out small yields, at least in comparison to their longer-dated peers. Also, these funds tend to be safer because of their focus on investment grade, but yields will be lower than could be found in the junk bond category.

History of Fund/Manager

TRBUX is a part of the T. Rowe Price family of funds, a company based out of Baltimore, MD. Since T. Rowe Price Ultra Short-Term Bond made its debut in December of 2012, TRBUX has garnered more than $1.35 billion in assets. The fund's current manager, Alexander Obaza, has been in charge of the fund since March of 2020.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 3.32%, 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 5.14%, 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. The standard deviation of TRBUX over the past three years is 0.88% compared to the category average of 7.3%. Over the past 5 years, the standard deviation of the fund is 0.92% compared to the category average of 7.18%. This makes the fund less volatile than its peers over the past half-decade.

TRBUX carries a beta of 0.05, 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 0.83, 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, TRBUX is a no load fund. It has an expense ratio of 0.31% compared to the category average of 0.67%. Looking at the fund from a cost perspective, TRBUX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment needs to be at least $100.

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

Bottom Line

Overall, T. Rowe Price Ultra Short-Term Bond ( TRBUX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, T. Rowe Price Ultra Short-Term Bond ( TRBUX ) looks like a good potential choice for investors right now.

Want even more information about TRBUX? 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. 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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