Is PONAX a Strong Bond Fund Right Now?
There are plenty of choices in the Mutual Fund Bond category, but where should you start your research? Well, one fund that might be worth investigating is PIMCO Income A (PONAX). PONAX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
History of Fund/Manager
PIMCO Funds is responsible for PONAX, and the company is based out of Newport Beach, CA. PIMCO Income A debuted in April of 2007. Since then, PONAX has accumulated assets of about $12.48 billion, according to the most recently available information. A team of investment professionals is the fund's current manager.
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 1.13%, and is 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 -0.63%, which places it in the top 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 15.84%, the standard deviation of PONAX over the past three years is 7.34%. The standard deviation of the fund over the past 5 years is 5.82% compared to the category average of 13.77%. This makes the fund less volatile than its peers over the past half-decade.
PONAX carries a beta of 0.35, 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 0.78, 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, PONAX has 42.28% in high quality bonds rated at least 'AA' or higher, while 23.74% are of medium quality, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 33.47%, giving PONAX an average quality of A. This means that it focuses on high quality securities.
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, PONAX is a load fund. It has an expense ratio of 0.90% compared to the category average of 0.83%. From a cost perspective, PONAX is actually more expensive than its peers.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $50.
Overall, PIMCO Income A ( PONAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and higher fees, PIMCO Income A ( PONAX ) looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Mutual Fund Bond, make sure to go to www.zacks.com/funds/mutual-funds 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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