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Is BFRAX a Strong Bond Fund Right Now?

Any investors hoping to find a Diversified Bonds fund could think about starting with BlackRock Floating Rate Income A (BFRAX). BFRAX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

The world of Diversified Bonds funds is an area filled with options, such as BFRAX. Investors looking for exposure to a variety of fixed income types that stretch across issuers, maturities, and credit levels will find a good fit with Diversified Bonds funds. Typically, these funds have a solid amount of exposure to government debt, as well as modest holdings in the corporate bond market.

History of Fund/Manager

BFRAX is a part of the BlackRock family of funds, a company based out of New York, NY. Since BlackRock Floating Rate Income A made its debut in July of 2010, BFRAX has garnered more than $338.74 million in assets. The fund's current manager is a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. BFRAX has a 5-year annualized total return of 4.75% and is 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 5.44%, which places it in the top 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, BFRAX's standard deviation comes in at 3.79%, compared to the category average of 11.65%. Over the past 5 years, the standard deviation of the fund is 6.29% compared to the category average of 13.17%. This makes the fund less volatile than its peers over the past half-decade.

With a beta of -0.11, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, BFRAX has a positive alpha of 3.36, 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, BFRAX is a load fund. It has an expense ratio of 0.93% compared to the category average of 0.98%. From a cost perspective, BFRAX is actually cheaper than its peers.

This fund requires a minimum initial investment of $1,000, and each subsequent investment should be at least $50.

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

Bottom Line

Overall, BlackRock Floating Rate Income A ( BFRAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, BlackRock Floating Rate Income A ( BFRAX ) looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Diversified Bonds, 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.

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