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Is DLTNX a Strong Bond Fund Right Now?


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On the lookout for a Government Mortgage - Intermediate fund? Starting with DoubleLine Total Return Bond N (DLTNX) is one possibility. DLTNX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

The world of Government Mortgage - Intermediate funds is an area filled with choices, such as DLTNX. A mortgage-backed security (MBS) is a type of asset-backed security that packages mortgages together and then sells off the pooled securities. Government Mortgage - Intermediate funds focus on this market; this fund category presents a medium risk and yield profile, and concentrates on MBS with at least three years to maturity but less than 10.

History of Fund/Manager

Double Line is based in Los Angeles, CA, and is the manager of DLTNX. Since DoubleLine Total Return Bond N made its debut in April of 2010, DLTNX has garnered more than $6.66 billion in assets. Philip A. Barach is the fund's current manager and has held that role since April of 2010.

Performance

Of course, investors look for strong performance in funds. DLTNX has a 5-year annualized total return of 2.67% 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 1.97%, which places it in the top third during this time-frame.

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.

For those that believe interest rates will rise, this is an important factor to consider. DLTNX has a modified duration of 4.12, which suggests that the fund will decline 4.12% 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. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 3.53% means that a $10,000 investment should result in a yearly payout of $353.

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

Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks. DLTNX carries a beta of 0.64, 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 0.85, 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, DLTNX has 71.19% in high quality bonds rated at least 'AA' or higher. 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, DLTNX is a no load fund. It has an expense ratio of 0.73% compared to the category average of 0.05%. So, DLTNX is actually more expensive than its peers from a cost perspective.

Investors should also note that the minimum initial investment for the product is $2,000 and that each subsequent investment needs to be at $100.

Bottom Line

This puts this fund from Double Line 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 Mortgage - Intermediate category.

Don't stop here for your research on Government Mortgage - Intermediate funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare DLTNX to its peers as well 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , Stocks
Referenced Symbols: DLTNX




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