If you have been looking for Investment Grade Bond - Intermediate fund category, a potential starting could be PIMCO Total Return Institutional (PTTRX). PTTRX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.
Objective
PTTRX 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
PIMCO Funds is based in Newport Beach, CA, and is the manager of PTTRX. PIMCO Total Return Institutional made its debut in May of 1987, and since then, PTTRX has accumulated about $36.73 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.
Performance
Of course, investors look for strong performance in funds. PTTRX has a 5-year annualized total return of 0.12% 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 -1.99%, which places it in the middle 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 PTTRX over the past three years is 7.85% compared to the category average of 13.32%. The standard deviation of the fund over the past 5 years is 6.57% compared to the category average of 13.94%. This makes the fund less volatile than its peers over the past half-decade.
This fund has a beta of 1.01, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, PTTRX has a positive alpha of 0.43, 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, PTTRX has 72.1% in high quality bonds rated at least 'AA' or higher, while 21.5% 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, PTTRX is a no load fund. It has an expense ratio of 0.46% compared to the category average of 0.91%. Looking at the fund from a cost perspective, PTTRX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $1 million; each subsequent investment has no minimum amount.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, PIMCO Total Return Institutional ( PTTRX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.
Don't stop here for your research on Investment Grade Bond - 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 PTTRX to its peers as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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