Is FATRX a Strong Bond Fund Right Now?
Any investors hoping to find a Investment Grade - Bonds: Misc fund could think about starting with Frost Total Return Bond Investor (FATRX). FATRX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
We classify FATRX in the Investment Grade - Bonds: Misc, as area rife with many potential choices. Investment Grade - Bonds: Misc funds are not focused on one part of the curve and often hold a variety of investment grade credit levels. However, this means that funds in this category may not be directly comparable, and duration risk will depend on a given fund's profile. Also, these funds tend to be safer because of their focus on investment grade, but yields will be lower than could be found in the junk bond category.
History of Fund/Manager
Frost Funds is responsible for FATRX, and the company is based out of San Antonio, Tx. The Frost Total Return Bond Investor made its debut in July of 2008 and FATRX has managed to accumulate roughly $233.53 million in assets, as of the most recently available information. Jeffery Elswick is the fund's current manager and has held that role since July of 2008.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 3.31%, and it sits in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 6.04%, which places it in the top 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. FATRX's standard deviation over the past three years is 4.56% compared to the category average of 9.09%. The fund's standard deviation over the past 5 years is 4.27% compared to the category average of 10.52%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.
If you believe interest rates will rise, this is an important factor to look at. FATRX has a modified duration of 5.38, which suggests that the fund will decline 5.38% for every hundred-basis-point increase in interest rates.
Income
Income is often a big reason for purchasing a fixed income security, so it is important to consider the fund's average coupon. This metric takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 5.46% means that a $10,000 investment should result in a yearly payout of $546.
A higher coupon is good for those seeking a strong level of current income, but it could also pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond. Investors also need to consider risk relative to broad benchmarks, as income is only one part of the bond picture.
FATRX carries a beta of 0.74, 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 1.53, 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, FATRX has 74.86% in high quality bonds rated at least "AA" or higher. The fund has an average quality of AA, and focuses on high quality securities.Expenses
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, FATRX is a no load fund. It has an expense ratio of 0.70% compared to the category average of 0.84%. Looking at the fund from a cost perspective, FATRX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment needs to be at least $500.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, Frost Total Return Bond Investor ( FATRX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, Frost Total Return Bond Investor ( FATRX ) looks like a good potential choice for investors right now.
Want even more information about FATRX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Get Your Free (FATRX): Fund Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Source Zacks-com
