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Is PTTAX a Strong Bond Fund Right Now?

Any investors hoping to find a Mutual Fund Bond fund might consider looking past PIMCO Total Return A (PTTAX). PTTAX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

PTTAX finds itself in the PIMCO Funds family, based out of Newport Beach, CA. PIMCO Total Return A made its debut in May of 1987, and since then, PTTAX has accumulated about $5.25 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.

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 -0.99%, and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of -4.21%, which places it in the middle third during this time-frame.

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. PTTAX's standard deviation over the past three years is 5.8% compared to the category average of 14.99%. Looking at the past 5 years, the fund's standard deviation is 4.96% compared to the category average of 13.14%. This makes the fund less volatile than its peers over the past half-decade.

PTTAX carries a beta of 1.01, meaning that the fund is more volatile than a broad market index of fixed income securities. With this in mind, it has a negative alpha of -0.43, 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, PTTAX has 66.04% in high quality bonds rated at least 'AA' or higher, while 22.24% are of medium quality, with ratings of 'A' to 'BBB'. 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, PTTAX is a load fund. It has an expense ratio of 0.80% compared to the category average of 0.78%. Looking at the fund from a cost perspective, PTTAX is actually more expensive than its peers.

Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $50.

Bottom Line

Overall, PIMCO Total Return A ( PTTAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and higher fees, PIMCO Total Return A ( PTTAX ) looks like a somewhat weak choice for investors right now.

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