Is RPSIX a Strong Bond Fund Right Now?
There are plenty of choices in the Diversified Bonds category, but where should you start your research? Well, one fund that might be worth investigating is T. Rowe Price Spectrum Income (RPSIX). RPSIX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
The world of Diversified Bonds funds is an area filled with options, such as RPSIX. Investors looking for exposure to a variety of fixed income types that stretch across issuers, maturities, and credit levels will find a good fit with Diversified Bonds funds. Typically, these funds have a solid amount of exposure to government debt, as well as modest holdings in the corporate bond market.
History of Fund/Manager
T. Rowe Price is responsible for RPSIX, and the company is based out of Baltimore, MD. Since T. Rowe Price Spectrum Income made its debut in June of 1990, RPSIX has garnered more than $6.41 billion in assets. The fund's current manager, Charles Shriver, has been in charge of the fund since May of 2011.
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 4.74%, and it sits in the top 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 3.12%, 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. Over the past three years, RPSIX's standard deviation comes in at 6.59%, compared to the category average of 7.53%. Looking at the past 5 years, the fund's standard deviation is 5.6% compared to the category average of 6.08%. This makes the fund less volatile than its peers over the past half-decade.
This fund has a beta of 0.8, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, RPSIX has a positive alpha of 1.51, which measures performance on a risk-adjusted basis.
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, RPSIX has 33.75% in high quality bonds rated at least 'AA' or higher, while 30.7% are of medium quality, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 31.39%, giving RPSIX an average quality of A. This means that it focuses on high quality securities.
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, RPSIX is a no load fund. It has an expense ratio of 0.65% compared to the category average of 0.89%. RPSIX is actually cheaper than its peers when you consider factors like cost.
While the minimum initial investment for the product is $2,500, investors should also note that each subsequent investment needs to be at least $100.
Overall, T. Rowe Price Spectrum Income ( RPSIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
This could just be the start of your research on RPSIXin the Diversified Bonds 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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