Investment Grade Bond - Short fund seekers should consider taking a look at PIMCO Short Term Institutional (PTSHX). PTSHX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

PTSHX is part of the Investment Grade Bond - Short category, a segment that boasts an array of other possible selections. Investment Grade Bond - Short funds target the short end of the curve by focusing on bonds that mature in less than two years. Fixed income instruments with this maturity level typically have low duration risk and pay out small yields, at least in comparison to their longer-dated peers. Also, these funds tend to be safer because of their focus on investment grade, but yields will be lower than could be found in the junk bond category.

History of Fund/Manager

PTSHX is a part of the PIMCO Funds family of funds, a company based out of Newport Beach, CA. Since PIMCO Short Term Institutional made its debut in October of 1987, PTSHX has garnered more than $7.60 billion in assets. The fund is currently managed by a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 2.43%, 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 2.65%, 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. The standard deviation of PTSHX over the past three years is 0.91% compared to the category average of 12.33%. The fund's standard deviation over the past 5 years is 1.92% compared to the category average of 13.27%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of -0.02, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, PTSHX has a positive alpha of 0.42, 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, PTSHX has 57.2% in high quality bonds rated at least 'AA' or higher, while 42.3% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of AA, and focuses on high quality securities.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, PTSHX is a no load fund. It has an expense ratio of 0.45% compared to the category average of 0.87%. PTSHX is actually cheaper than its peers when you consider factors like cost.

While the minimum initial investment for the product is $1 million, investors should also note that there is no minimum for each subsequent investment.

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

Bottom Line

Overall, PIMCO Short Term Institutional ( PTSHX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, PIMCO Short Term Institutional ( PTSHX ) 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 Investment Grade Bond - Short, make sure to go to www.zacks.com/funds/mutual-funds for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.

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