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There are plenty of choices in the Government Mortgage - Intermediate category, but where should you start your research? Well, one fund that might be worth investigating is Wells Fargo Coreblder Shares Series M (WFCMX - Free Report) . WFCMX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
The world of Government Mortgage - Intermediate funds is an area filled with choices, such as WFCMX. A mortgage-backed security (MBS) is a type of asset-backed security that packages mortgages together and then sells off the pooled securities. Government Mortgage - Intermediate funds focus on this market; this fund category presents a medium risk and yield profile, and concentrates on MBS with at least three years to maturity but less than 10.
History of Fund/Manager
WFCMX is a part of the Wells Fargo family of funds, a company based out of San Francisco, CA. Wells Fargo Coreblder Shares Series M made its debut in February of 2009, and since then, WFCMX has accumulated about $826.34 million in assets, per the most up-to-date date available. 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 carries a 5-year annualized total return of 4.31%, 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 4.4%, which places it in the top third during this time-frame.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
If you believe interest rates will rise, this is an important factor to look at. WFCMX has a modified duration of 5.09, which suggests that the fund will decline 5.09% for every hundred-basis-point increase in interest rates.
Income
Since income is, of course, a big reason for purchasing a fixed income security, it is always important to consider the fund's average coupon. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 4.44% means that a $10,000 investment should result in a yearly payout of $444.
For those seeking a strong level of current income, a higher coupon is typically good news. However, it could pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks. WFCMX carries a beta of 0.91, 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 1.52, 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, WFCMX has 22.06% in high quality bonds rated at least 'AA' or higher, while 57.31% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.
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, WFCMX is a no load fund. It has an expense ratio of 0% compared to the category average of 0.07%. Looking at the fund from a cost perspective, WFCMX 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
This puts this fund from Wells Fargo in the top 40% of all mutual funds we have a rank on right now. As a result, this is likely an excellent choice for investors seeking an option in the Government Mortgage - Intermediate category.
Your research on the Government Mortgage - Intermediate segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.
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Is WFCMX a Strong Bond Fund Right Now?
There are plenty of choices in the Government Mortgage - Intermediate category, but where should you start your research? Well, one fund that might be worth investigating is Wells Fargo Coreblder Shares Series M (WFCMX - Free Report) . WFCMX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
The world of Government Mortgage - Intermediate funds is an area filled with choices, such as WFCMX. A mortgage-backed security (MBS) is a type of asset-backed security that packages mortgages together and then sells off the pooled securities. Government Mortgage - Intermediate funds focus on this market; this fund category presents a medium risk and yield profile, and concentrates on MBS with at least three years to maturity but less than 10.
History of Fund/Manager
WFCMX is a part of the Wells Fargo family of funds, a company based out of San Francisco, CA. Wells Fargo Coreblder Shares Series M made its debut in February of 2009, and since then, WFCMX has accumulated about $826.34 million in assets, per the most up-to-date date available. 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 carries a 5-year annualized total return of 4.31%, 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 4.4%, which places it in the top third during this time-frame.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
If you believe interest rates will rise, this is an important factor to look at. WFCMX has a modified duration of 5.09, which suggests that the fund will decline 5.09% for every hundred-basis-point increase in interest rates.
Income
Since income is, of course, a big reason for purchasing a fixed income security, it is always important to consider the fund's average coupon. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 4.44% means that a $10,000 investment should result in a yearly payout of $444.
For those seeking a strong level of current income, a higher coupon is typically good news. However, it could pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks. WFCMX carries a beta of 0.91, 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 1.52, 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, WFCMX has 22.06% in high quality bonds rated at least 'AA' or higher, while 57.31% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.
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, WFCMX is a no load fund. It has an expense ratio of 0% compared to the category average of 0.07%. Looking at the fund from a cost perspective, WFCMX 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
This puts this fund from Wells Fargo in the top 40% of all mutual funds we have a rank on right now. As a result, this is likely an excellent choice for investors seeking an option in the Government Mortgage - Intermediate category.
Your research on the Government Mortgage - Intermediate segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.