Quantcast

Is WFCMX a Strong Bond Fund Right Now?


Shutterstock photo

Government Mortgage - Intermediate fund seekers should consider taking a look at Wells Fargo Coreblder Shares Series M (WFCMX). WFCMX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify WFCMX in the Government Mortgage - Intermediate category, an area full of potential choices. Government Mortgage - Intermediate funds focus on the mortgage-backed securities (MBS) market, which packages mortgages together and then sells off the pooled securities as a MBS. Honing in on MBS'that have at least three years to maturity but less than 10, this fund category presents a medium risk and yield profile.

History of Fund/Manager

Wells Fargo is responsible for WFCMX, and the company is based out of San Francisco, CA. The Wells Fargo Coreblder Shares Series M made its debut in February of 2009 and WFCMX has managed to accumulate roughly $676.80 million in assets, as of the most recently available information. The fund's current manager is a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 4.62%, 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 3.29%, 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, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.

If you believe interest rates will rise, this is an important factor to look at. WFCMX has a modified duration of 6.31, which suggests that the fund will decline 6.31% 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. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 4.63% means that a $10,000 investment should result in a yearly payout of $463.

If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur if rates are lower in the future when compared to the initial purchase date of the bond.

Since income is just one part of the bond picture, investors need to consider risk relative to broad benchmarks. With a beta of 0.99, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, WFCMX has a positive alpha of 2.49, 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, WFCMX has 23.05% in high quality bonds rated at least 'AA' or higher, while 55.51% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, WFCMX is a no load fund. It has an expense ratio of 0% compared to the category average of 0.06%. From a cost perspective, WFCMX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.

Bottom Line

This puts this fund from Wells Fargo in the top 40% 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 WFCMX to its peers as well 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.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Get Your Free (WFCMX): Fund Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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: WFCMX



More from Zacks.com

Subscribe







Zacks.com
Contributor:

Zacks.com

Equity Research












Research Brokers before you trade

Want to trade FX?