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Is FGMNX a Strong Bond Fund Right Now?

On the lookout for a Mutual Fund Bond fund? Starting with Fidelity GNMA Fund (FGMNX) is one possibility. FGMNX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FGMNX. Fidelity GNMA Fund debuted in November of 1985. Since then, FGMNX has accumulated assets of about $2.98 billion, according to the most recently available information. The fund's current manager, Franco Castagliuolo, has been in charge of the fund since December of 2009.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 0.4%, 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 -0.49%, 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, FGMNX's standard deviation comes in at 2.97%, compared to the category average of 3.21%. Looking at the past 5 years, the fund's standard deviation is 2.66% compared to the category average of 2.88%. This makes the fund less volatile than its peers over the past half-decade.

With a beta of 0.53, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, FGMNX has a negative alpha of -0.74, which measures performance on a risk-adjusted basis.

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, FGMNX is a no load fund. It has an expense ratio of 0.45% compared to the category average of 0.77%. So, FGMNX is actually cheaper than its peers from a cost perspective.

Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.

Bottom Line

Overall, Fidelity GNMA Fund ( FGMNX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a great potential choice for investors right now.

Your research on the Mutual Fund Bond 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. 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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