On the lookout for an Investment Grade Bond - Intermediate fund? Starting with Fidelity Strategic Real Return (FSRRX) should not be a possibility at this time. FSRRX holds a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify FSRRX in the Investment Grade Bond - Intermediate category, an area rife with potential choices. Investment Grade Bond - Intermediate funds target the middle part of the curve, typically by investing in bonds that mature in more than three years but less than 15 years. At these maturity levels, fixed income instruments have medium duration risk--but they compensate investors with a respectable yield compared to shorter maturity options. Finally, a focus on investment grade ensures that these funds are safer, but yields will be lower than in the junk bond category.
History of Fund/Manager
Fidelity is responsible for FSRRX, and the company is based out of Boston, MA. Fidelity Strategic Real Return debuted in September of 2005. Since then, FSRRX has accumulated assets of about $193.62 million, according to the most recently available information. A team of investment professionals is the fund's current manager.
Performance
Investors naturally seek funds with strong performance. FSRRX has a 5-year annualized total return of 1.83% and is in the bottom 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 2.84%, which places it in the bottom 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. Compared to the category average of 8.05%, the standard deviation of FSRRX over the past three years is 4.3%. The standard deviation of the fund over the past 5 years is 4.55% compared to the category average of 8.37%. This makes the fund less volatile than its peers over the past half-decade.
FSRRX carries a beta of 0.24, 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 0.45, 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, FSRRX is a no load fund. It has an expense ratio of 0.83% compared to the category average of 0.82%. Looking at the fund from a cost perspective, FSRRX is actually more expensive than its peers.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Bottom Line
Overall, Fidelity Strategic Real Return ( FSRRX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and higher fees, this fund looks like a somewhat weak choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Investment Grade Bond - Intermediate, make sure to go to www.zacks.com/funds/mutual-funds 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.
Get Your Free (FSRRX): Fund Analysis Report
Original post
Zacks Investment Research