Is LFRAX a Strong Bond Fund Right Now?
If investors are looking at the Government - Bonds: Misc fund category, Lord Abbett Floating Rate A (LFRAX) could be a potential option. LFRAX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
LFRAX is one of many Government - Bonds: Misc funds to choose from. In their portfolios, Government - Bonds: Misc funds hold securities issued by the United States' federal government, which are often seen as risk-free assets and described as extremely low-risk from a default perspective. While a mixed approach usually results in a medium yield and risk profile, this fund category focuses across the curve, meaning the yields and interest rate sensitivity will vary.
History of Fund/Manager
Lord Abbett is based in Jersey City, NJ, and is the manager of LFRAX. Lord Abbett Floating Rate A debuted in December of 2007. Since then, LFRAX has accumulated assets of about $1.75 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 2.34%, and it sits in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 0.55%, which places it in the middle third during this time-frame.
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 LFRAX over the past three years is 9.41% compared to the category average of 13.44%. Looking at the past 5 years, the fund's standard deviation is 7.48% compared to the category average of 11.68%. This makes the fund less volatile than its peers over the past half-decade.
LFRAX carries a beta of 0.28, 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 1.13, which measures performance on a risk-adjusted basis.
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, LFRAX is a load fund. It has an expense ratio of 0.82% compared to the category average of 0.89%. Looking at the fund from a cost perspective, LFRAX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $1,500; each subsequent investment has no minimum amount.
Overall, Lord Abbett Floating Rate A ( LFRAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Lord Abbett Floating Rate A ( LFRAX ) looks like a good potential choice for investors right now.
This could just be the start of your research on LFRAXin the Government - Bonds: Misc category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank 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.
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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.