Is FLARX a Strong Bond Fund Right Now?

Have you been searching for a Investment Grade Bond - Short fund? You might want to begin with Pioneer Floating Rate A (FLARX). FLARX holds a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.

Objective

FLARX is classified in the Investment Grade Bond - Short segment by Zacks, an area full of investment potential. By investing in bonds that mature in less than two years, Investment Grade Bond - Short funds are focused on the short end of the curve. Fixed income instruments at this maturity level tend to have low duration risk, but they also pay out small yields compared to their longer-dated peers. Furthermore, these funds' focus on investment grade make them safer, but yields will be lower than in the junk bond category.

History of Fund/Manager

FLARX finds itself in the Victory family, based out of Columbus, OH. Since Pioneer Floating Rate A made its debut in February of 2007, FLARX has garnered more than $47.21 million in assets. The fund is currently managed by Jonathan Sharkey who has been in charge of the fund since February of 2007.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. FLARX has a 5-year annualized total return of 4.64%, and it sits in the bottom 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 7.76%, 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. Compared to the category average of 7.99%, the standard deviation of FLARX over the past three years is 2.53%. The fund's standard deviation over the past 5 years is 3.41% compared to the category average of 9.56%. 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.

For those that believe interest rates will rise, this is an important factor to consider. FLARX has a modified duration of .27, which suggests that the fund will decline 0.27% for every hundred-basis-point increase in interest rates.

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, FLARX is a load fund. It has an expense ratio of 1.05% compared to the category average of 0.97%. From a cost perspective, FLARX is actually more expensive than its peers.

Investors should also note that the minimum initial investment for the product is $2,500 and that each subsequent investment needs to be at $50.

Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.

Bottom Line

Overall, even with its comparatively weak performance, better downside risk, and higher fees, Pioneer Floating Rate A ( FLARX ) has a neutral Zacks Mutual Fund rank, and therefore looks a somewhat average choice for investors right now.

This could just be the start of your research on FLARX in the Investment Grade Bond - Short 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. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.

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This article originally published on Zacks Investment Research (zacks.com).

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