On the lookout for an International Bond - Emerging fund? Starting with T. Rowe Price Emerging Markets Bond (PREMX) should not be a possibility at this time. PREMX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify PREMX in the International Bond - Emerging category, an area rife with many investment choices. International Bond - Emerging funds focus on fixed income securities from emerging nations from around the globe. This usually results in exposure to economies like China, Brazil, India, South Africa, and Indonesia, just to name a few. Funds here offer geographic diversification, but they can also introduce currency risk into the picture as well.
History of Fund/Manager
PREMX finds itself in the T. Rowe Price family, based out of Baltimore, MD. The T. Rowe Price Emerging Markets Bond made its debut in December of 1994 and PREMX has managed to accumulate roughly $4.60 billion in assets, as of the most recently available information. The fund is currently managed by Michael J. Conelius who has been in charge of the fund since December of 1994.
Performance
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 2.51%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of -1.68%, which places it in the middle 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. PREMX's standard deviation over the past three years is 12.19% compared to the category average of 11.45%. Over the past 5 years, the standard deviation of the fund is 10.48% compared to the category average of 10.56%. This makes the fund less volatile than its peers over the past half-decade.
With a beta of 1.17, this fund is more volatile than a broad market index of fixed income securities. Taking this into account, PREMX has a negative alpha of -0.99, 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, PREMX has 33.8% in medium quality bonds, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 62.57%, giving PREMX an average quality of BBB. This means that it focuses on medium 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, PREMX is a no load fund. It has an expense ratio of 0.90% compared to the category average of 1.15%. So, PREMX is actually cheaper than its peers from a cost perspective.
This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $100.
Bottom Line
Overall, T. Rowe Price Emerging Markets Bond ( PREMX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, T. Rowe Price Emerging Markets Bond ( PREMX ) looks like a somewhat weak choice for investors right now.
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