Is PONCX a Strong Bond Fund Right Now?

Any investors hoping to find a Diversified Bonds fund could think about starting with PIMCO Income C (PONCX). PONCX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

We classify PONCX in the Diversified Bonds category, an area that is rife with potential choices. Diversified Bonds funds offer exposure to a wide variety of fixed income types, stretching across various issuers, credit levels, and maturities. Generally speaking, bond funds here will have sizable exposure to government debt, as well as modest holdings in the corporate bond market too.

History of Fund/Manager

PIMCO Funds is based in Newport Beach, CA, and is the manager of PONCX. Since PIMCO Income C made its debut in April of 2007, PONCX has garnered more than $3.72 billion in assets. The fund's current manager is a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 2.18%, and it sits in the middle 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 3.09%, 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.

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, PONCX's standard deviation comes in at 6.46%, compared to the category average of 12.99%. The standard deviation of the fund over the past 5 years is 6.71% compared to the category average of 14.27%. This makes the fund less volatile than its peers over the past half-decade.

PONCX carries a beta of 0.49, 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 2.17, which measures performance on a risk-adjusted basis.

Ratings

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, PONCX has 70.36% in high quality bonds rated at least 'AA' or higher. The fund has an average quality of AA, and focuses on high quality securities.

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, PONCX is a no load fund. It has an expense ratio of 1.65% compared to the category average of 0.95%. So, PONCX is actually more expensive than its peers from a cost perspective.

Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $50

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, PIMCO Income C ( PONCX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and higher fees, this fund looks like a good potential choice for investors right now.

For additional information on the Diversified Bonds area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into PONCX too for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.