Diversified Bonds fund seekers should not consider taking a look at PIMCO Commodity Real Retail Strategy A (PCRAX) at this time. PCRAX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
We classify PCRAX in the Diversified Bonds category, an area that is rife with potential choices. Diversified Bonds funds offer exposure to a wide variety of fixed income types, stretching across various issuers, credit levels, and maturities. Generally speaking, bond funds here will have sizable exposure to government debt, as well as modest holdings in the corporate bond market too.
History of Fund/Manager
PCRAX is a part of the PIMCO Funds family of funds, a company based out of Newport Beach, CA. PIMCO Commodity Real Retail Strategy A debuted in June of 2002. Since then, PCRAX has accumulated assets of about $226.14 million, according to the most recently available information. A team of investment professionals is the fund's current manager.
Performance
Of course, investors look for strong performance in funds. PCRAX has a 5-year annualized total return of 6.76% 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 1.32%, which places it in the bottom third during this time-frame.
It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.
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 PCRAX over the past three years is 16.35% compared to the category average of 14.43%. The standard deviation of the fund over the past 5 years is 18.61% compared to the category average of 15.57%. This makes the fund more volatile than its peers over the past half-decade.
PCRAX carries a beta of -1.04, 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 7.01, 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, PCRAX has 89.59% in high quality bonds rated at least 'AA' or higher. The fund has an average quality of AAA, 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, PCRAX is a load fund. It has an expense ratio of 1.36% compared to the category average of 0.96%. Looking at the fund from a cost perspective, PCRAX is actually more expensive than its peers.
While the minimum initial investment for the product is $1,000, investors should also note that each subsequent investment needs to be at least $50.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, PIMCO Commodity Real Retail Strategy A ( PCRAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and higher fees, this fund looks like a poor potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Diversified Bonds, make sure to go to www.zacks.com/funds/mutual-funds 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.
