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Is FFRHX a Strong Bond Fund Right Now?

Zacks Equity Research

If you have been looking for High Yield - Bonds funds, a place to start could be Fidelity Floating Rate High Income (FFRHX). FFRHX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FFRHX is part of the High Yield - Bonds section, which is a segment that boasts many possible options. Often referred to as " junk " bonds, High Yield - Bonds funds sit below investment grade, meaning they are at a high default risk compared to their investment grade peers. However, one advantage to junk bonds is that they generally pay out higher yields while posing similar interest rate risks to their investment grade counterparts.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FFRHX. Fidelity Floating Rate High Income debuted in August of 2000. Since then, FFRHX has accumulated assets of about $7.28 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

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 4.17%, and is in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 4.14%, which places it in the bottom 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 8.27%, the standard deviation of FFRHX over the past three years is 2.85%. The standard deviation of the fund over the past 5 years is 3.13% compared to the category average of 8.69%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of -0.25, 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 3.55, which measures performance on a risk-adjusted basis.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, FFRHX is a no load fund. It has an expense ratio of 0.69% compared to the category average of 1.02%. Looking at the fund from a cost perspective, FFRHX is actually cheaper than its peers.

While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.

Bottom Line

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

Want even more information about FFRHX? 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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