Is FPNIX a Strong Bond Fund Right Now?

There are plenty of choices in the Investment Grade Bond - Short category, but where should you start your research? Well, one fund that might be worth investigating is FPA New Income Fund (FPNIX). FPNIX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

FPNIX 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

FPA is based in Los Angeles, CA, and is the manager of FPNIX. The FPA New Income Fund made its debut in March of 1969 and FPNIX has managed to accumulate roughly $11.15 billion in assets, as of the most recently available information. Abhijeet Patwardhan is the fund's current manager and has held that role since November of 2015.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 3.33%, and is 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 5.89%, 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. FPNIX's standard deviation over the past three years is 3.37% compared to the category average of 6.46%. Over the past 5 years, the standard deviation of the fund is 2.91% compared to the category average of 7.55%. 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, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.

If you believe interest rates will rise, this is an important factor to look at. FPNIX has a modified duration of 3.34, which suggests that the fund will decline 3.34% for every hundred-basis-point increase in interest rates.

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, FPNIX is a no load fund. It has an expense ratio of 0.45% compared to the category average of 0.75%. FPNIX is actually cheaper than its peers when you consider factors like cost.

Investors need to be aware that with this product, the minimum initial investment is $1,500; each subsequent investment needs to be at least $100.

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

Bottom Line

Overall, FPA New Income Fund ( FPNIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, FPA New Income Fund ( FPNIX ) looks like a good potential choice for investors right now.

Don't stop here for your research on Investment Grade Bond - Short 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 FPNIX to its peers as well 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.

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

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