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There are plenty of choices in the Mutual Fund Bond category, but where should you start your research? Well, one fund that might be worth investigating is Fidelity Floating Rate High Income (FFRHX). FFRHX carries 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 FFRHX. Fidelity Floating Rate High Income made its debut in August of 2000, and since then, FFRHX has accumulated about $6.92 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
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 2.71%, and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 1.94%, 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. FFRHX's standard deviation over the past three years is 8.08% compared to the category average of 13.81%. Over the past 5 years, the standard deviation of the fund is 6.54% compared to the category average of 12.23%. This makes the fund less volatile than its peers over the past half-decade.
FFRHX carries a beta of -0.17, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 1.87, 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 0.68% compared to the category average of 0.99%. 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.