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Is PTTRX a Strong Bond Fund Right Now?

If you have been looking for Mutual Fund Bond funds, it would not be wise to start your search with PIMCO Total Return Institutional (PTTRX). PTTRX possesses 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

PTTRX finds itself in the PIMCO Funds family, based out of Newport Beach, CA. PIMCO Total Return Institutional made its debut in May of 1987, and since then, PTTRX has accumulated about $43.65 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 has delivered a 5-year annualized total return of -0.66%, 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 -3.91%, 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. Over the past three years, PTTRX's standard deviation comes in at 5.8%, compared to the category average of 14.99%. The standard deviation of the fund over the past 5 years 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.

With a beta of 1.01, this fund is more volatile than a broad market index of fixed income securities. Taking this into account, PTTRX has a negative alpha of -0.1, 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, PTTRX 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

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, PTTRX is a no load fund. It has an expense ratio of 0.46% compared to the category average of 0.78%. Looking at the fund from a cost perspective, PTTRX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $1 million and that each subsequent investment has no minimum amount.

Bottom Line

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

This could just be the start of your research on PTTRXin the Mutual Fund Bond 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. 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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