Is FRFZX a Strong Bond Fund Right Now?

Any investors hoping to find a High Yield – Bonds fund could think about starting with PGIM Floating Rate Income Z (FRFZX). FRFZX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

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FRFZX 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.

PGIM is based in Providence, RI, and is the manager of FRFZX. PGIM Floating Rate Income Z debuted in March of 2011. Since then, FRFZX has accumulated assets of about $1.59 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 6.11%, and is 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 6.49%, which places it in the middle third during this time-frame.

It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.

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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. FRFZX’s standard deviation over the past three years is 4.39% compared to the category average of 11.64%. The standard deviation of the fund over the past 5 years is 8.55% compared to the category average of 13.11%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of -0.14, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, FRFZX has a positive alpha of 4.75, which measures performance on a risk-adjusted basis.

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, FRFZX ‘s junk bond component-bonds rated ‘BB’ or below-is at 63%. This means that the fund has an average quality of BBB, and focuses on medium quality securities.

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