Is PTTAX a Strong Bond Fund Right Now?

If you're looking for an Investment Grade Bond - Intermediate fund category, then a potential option is PIMCO Total Return A (PTTAX). PTTAX has a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

PTTAX is one of many Investment Grade Bond - Intermediate funds to pick from. Investment Grade Bond - Intermediate funds focus on the middle part of the curve, generally with bonds that usually mature in more than three years but less than 15 years. Fixed income instruments with this maturity level usually have medium duration risk, but they also compensate investors with a modest yield, at least when compared to their short maturity counterparts. Additionally, the focus on investment grade will make funds here safer, but yields will be lower than in the junk bond category.

History of Fund/Manager

PTTAX is a part of the PIMCO Funds family of funds, a company based out of Newport Beach, CA. PIMCO Total Return A made its debut in May of 1987, and since then, PTTAX has accumulated about $7.98 billion in assets, per the most up-to-date date available. The fund's current manager is a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 3.35%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 4.48%, 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. Compared to the category average of 13.17%, the standard deviation of PTTAX over the past three years is 3.57%. Looking at the past 5 years, the fund's standard deviation is 3.32% compared to the category average of 11.12%. This makes the fund less volatile than its peers over the past half-decade.

PTTAX carries a beta of 0.96, 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 0.31, 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, PTTAX has 52.76% in high quality bonds rated at least 'AA' or higher, while 35.8% 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, PTTAX is a load fund. It has an expense ratio of 0.80% compared to the category average of 0.79%. So, PTTAX is actually more expensive than its peers from a cost perspective.

Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $50.

Bottom Line

Overall, PIMCO Total Return A ( PTTAX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and higher fees, PIMCO Total Return A ( PTTAX ) looks like a somewhat average choice for investors right now.

This could just be the start of your research on PTTAXin the Investment Grade Bond - Intermediate 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. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.


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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.

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