Is FFRHX a Strong Bond Fund Right Now?

Zacks Equity Research
·3-min read

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 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that FFRHX is a High Yield - Bonds option, which is an area loaded with different investment choices. High Yield - Bonds funds are often known as " junk " bonds since they are below investment grade. This means they are at an elevated risk of default, at least when compared to their investment grade peers. On the plus side, junk bonds generally pay out higher yields, all while posing similar interest rate risks as we see with 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 made its debut in August of 2000, and since then, FFRHX has accumulated about $4.77 billion in assets, per the most up-to-date date available. 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. FFRHX has a 5-year annualized total return of 4.94% 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 3.67%, 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. Over the past three years, FFRHX's standard deviation comes in at 8.11%, compared to the category average of 13.84%. The standard deviation of the fund over the past 5 years is 6.51% compared to the category average of 11.68%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.12, 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 3.62, which measures performance on a risk-adjusted basis.

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, FFRHX is a no load fund. It has an expense ratio of 0.68% compared to the category average of 1.01%. Looking at the fund 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.

Don't stop here for your research on High Yield - Bonds funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare FFRHX to its peers as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.


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