Yahoo Finance Is FRFZX a Strong Bond Fund Right Now?
There are plenty of choices in the High Yield - Bonds category, but where should you start your research? Well, one fund that might be worth investigating is PGIM Floating Rate Income Z (FRFZX). FRFZX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
We note that FRFZX is a High Yield - Bonds option, which is an area loaded with different investment choices. High Yield - Bonds funds are often known as " junk " bonds since they are below investment grade. This means they are at an elevated risk of default, at least when compared to their investment grade peers. On the plus side, junk bonds generally pay out higher yields, all while posing similar interest rate risks as we see with their investment grade counterparts.
History of Fund/Manager
PGIM is based in Providence, RI, and is the manager of FRFZX. Since PGIM Floating Rate Income Z made its debut in March of 2011, FRFZX has garnered more than $1.54 billion in assets. The fund's current manager is a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 5.16%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 5.09%, 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. The standard deviation of FRFZX over the past three years is 4.43% compared to the category average of 11.65%. The fund's standard deviation over the past 5 years is 8.6% compared to the category average of 13.17%. This makes the fund less volatile than its peers over the past half-decade.
With a beta of -0.14, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, FRFZX has a positive alpha of 4.06, 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, FRFZX 's junk bond component-bonds rated 'BB' or below-is at 63%. This means that the fund has an average quality of BBB, and focuses on medium quality securities.
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, FRFZX is a no load fund. It has an expense ratio of 0.76% compared to the category average of 0.98%. FRFZX 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 $0; each subsequent investment has no minimum amount.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, PGIM Floating Rate Income Z ( FRFZX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, PGIM Floating Rate Income Z ( FRFZX ) looks like a good potential choice for investors right now.
Want even more information about FRFZX? 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. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.
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