5 / 5 Stars
4 4 4 5 2
Zacks Investment Research
Standard & Poor's
4 / 5 Stars
#17 in Intermediate-Term Bond
U.S. News evaluated 273 Intermediate-Term Bond Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
The fund has returned 6.19 percent over the past year, 5.13 percent over the past three years, 7.59 percent over the past five years, and 6.23 percent over the past decade.
|Trailing Returns||Updated 06.30.2014|
|Year to date||4.8%|
|3 Years (Annualized)||5.1%|
|5 Years (Annualized)||7.6%|
|10 Years (Annualized)||6.2%|
With the Baird Core Plus Bond Fund, what you see is what you get. And over the years, the fund's straightforward, sensible approach has paid off quite well.
As of July 03, 2014, the fund has assets totaling almost $3.42 billion invested in 677 different holdings. Its portfolio consists of a broad mix of fixed-income holdings, including treasuries, mortgage-backed securities, and corporate bonds.
After losing money in 2008, this intermediate-term bond fund has done a solid job of rebuilding its portfolio. In particular, the fund has benefitted from some of its corporate bonds. Corporates were badly battered during the downturn, but they came roaring back in 2009. The fund has reaped similar benefits from its non-agency mortgage-backed securities, which have rebounded from their Depression-era lows. Within the corporate sector, management has been enthusiastic as of late about bonds issued by companies in the financial sector. In particular, co-manager Warren Pierson says the newly minted financial reform bill is "music to the ears" of bond holders since new restrictions make it harder for institutions to engage in actions that could eventually lead them to default on their debt. Lately, one detractor from the fund's performance has been the fund's underweight in treasuries. Recently, long-term treasury notes have been on a tear as nervous investors flee to safety. The fund has returned 6.19 percent over the past year and 5.13 percent over the past three years.
Historically, the fund has been a steady performer. All six of the fund's main portfolio managers have been on board since its 2000 inception, and this continuity of leadership has played a big role in the fund's long-term success. After stumbling a bit out of the gate following its launch, the fund has consistently landed in the top half of Morningstar's intermediate-term bond category. The fund has returned 7.59 percent over the past five years and 6.23 percent over the past decade.
The fund keeps its average duration in line with that of its benchmark, the Barclays Capital U.S. Universal Index. "We don't think we can consistently add value to the portfolio by trying to time interest rates," says co-manager Mary Ellen Stanek. The fund adds value by making bets on sectors and on individuals securities. The fund doesn't engage in hedging its currency risk; all holdings are denominated in U.S. dollars. Lately, the fund hasn't made any significant changes. "We think this is not the time to be trying to do anything heroic," says Pierson.
Role in Portfolio
As its name implies, this fund aims to be a core holding within a portfolio.
Six main portfolio managers are backed by a large Baird support staff. All six have been with the fund since its 2000 launch.
Baird Core Plus Bond Fund has an expense ratio of 0.30 percent.
One of the biggest risks for bond funds is the potential for rising interest rates. As interest rates go up, bond prices decline.