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Is FFRHX a Strong Bond Fund Right Now?

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·4 min read
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If you've been stuck searching for High Yield - Bonds funds, consider Fidelity Floating Rate High Income (FFRHX) as a possibility. FFRHX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FFRHX is classified in the High Yield - Bonds segment by Zacks, an area full of investment possibilities. High Yield - Bonds funds come in below investment grade, and are referred to as " junk " bonds for this reason. Compared to their investment grade peers, these funds are at a higher default risk, but typically pay out higher yields while posing similar interest rate risks.

History of Fund/Manager

Fidelity is responsible for FFRHX, and the company is based out of Boston, MA. Fidelity Floating Rate High Income debuted in August of 2000. Since then, FFRHX has accumulated assets of about $6.32 billion, according to the most recently available information. The fund's current manager, Eric Mollenhauer, has been in charge of the fund since April of 2013.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 4.76%, 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 4.28%, which places it in the top 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. Compared to the category average of 13.88%, the standard deviation of FFRHX over the past three years is 8.14%. Looking at the past 5 years, the fund's standard deviation is 6.34% compared to the category average of 11.45%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.11, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, FFRHX has a positive alpha of 3.63, 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, FFRHX 's junk bond component-bonds rated 'BB' or below-is at 94.14%. This means that the fund has an average quality of BBB, and focuses on medium 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, FFRHX is a no load fund. It has an expense ratio of 0.68% compared to the category average of 1%. From a cost perspective, FFRHX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.

Bottom Line

Overall, Fidelity Floating Rate High Income ( FFRHX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, Fidelity Floating Rate High Income ( FFRHX ) looks like a good potential choice for investors right now.

Your research on the High Yield - Bonds segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer 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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