Is RPSIX a Strong Bond Fund Right Now?

On the lookout for a Diversified Bonds fund? Starting with T. Rowe Price Spectrum Income (RPSIX) should not be a possibility at this time. RPSIX holds a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.

Objective

We classify RPSIX in the Diversified Bonds category, an area that is rife with potential choices.Diversified Bonds funds offer exposure to a wide variety of fixed income types, stretching across various issuers, credit levels, and maturities. Generally speaking, bond funds here will have sizable exposure to government debt, as well as modest holdings in the corporate bond market too.

History of Fund/Manager

RPSIX finds itself in the T. Rowe Price family, based out of Baltimore, MD. T. Rowe Price Spectrum Income made its debut in June of 1990, and since then, RPSIX has accumulated about $1.53 billion in assets, per the most up-to-date date available. The fund's current manager is a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 2.26%, and is 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 6.43%, which places it in the bottom 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. RPSIX's standard deviation over the past three years is 4.68% compared to the category average of 7.41%. Over the past 5 years, the standard deviation of the fund is 5.98% compared to the category average of 8.8%. This makes the fund less volatile than its peers over the past half-decade.

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, RPSIX is a no load fund. It has an expense ratio of 0.53% compared to the category average of 0.91%. From a cost perspective, RPSIX 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 $100.

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, average downside risk, and lower fees, T. Rowe Price Spectrum Income ( RPSIX ) has a low Zacks Mutual Fund rank, and therefore looks a somewhat weak choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Diversified Bonds, make sure to go to www.zacks.com/funds/mutual-funds 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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