4 / 5 Stars
4 4 4 4 1
Zacks Investment Research
Standard & Poor's
3 / 5 Stars
#82 in Intermediate-Term Bond
U.S. News evaluated 276 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 -0.73 percent over the past year, 3.27 percent over the past three years, 7.99 percent over the past five years, and 5.81 percent over the past decade.
|Trailing Returns||Updated 10.31.2013|
|Year to date||-1.2%|
|3 Years (Annualized)||3.3%|
|5 Years (Annualized)||8.0%|
|10 Years (Annualized)||5.8%|
Managers PIMCO Bond rarely disappoints. With famed bond guru Bill Gross at the helm, the fund has lost money during only one calendar year in the past decade (2008), and its trailing returns are some of the category’s best.
As of November 05, 2013, the fund has assets totaling almost $1.24 billion invested in 771 different holdings. Its portfolio consists of U.S. corporate and government bonds with a smaller portion of foreign corporates and mortgage-backed securities.
Gross invests in a wide variety of fixed-income options, including high-yield, municipal, and developed and emerging markets sovereign debt. According to the fund’s fourth quarter commentary, going forward, management expects to reduce duration exposure among its U.S. bonds and pick up more agency mortgages to take advantage of opportunities in rising mortgage coupons. Among corporate bonds, management likes U.S. banks, which should be helped by stronger balance sheets. Despite uncertainty about the Build America Bonds program, management says it will continue to favor those bonds for their attractive valuations relative to corporates. Finally, management hopes to hedge against a declining dollar by taking positions in emerging markets currencies in countries such as Brazil and China. The fund has returned -0.73 percent over the past year and 3.27 percent over the past three years.
The fund’s trailing returns are some of the best in its class. As of February 2011, its 15-year trailing return ranks the fund in the top 2 percent of Morningstar-rated intermediate bonds. Returns for the past decade are in the top 6 percent. The fund has returned 7.99 percent over the past five years and 5.81 percent over the past decade.
Management meets annually to determine the general maturity and duration ranges for the portfolio, and evaluates long-term economic trends and market forces such as interest rates, global economic growth, demographics, and changing monetary policy. Conclusions from those discussions inform bond selection and portfolio structure. After each quarter, management reevaluates the portfolio and shorter-term forecasts are developed to fine tune the fund’s strategy.
Role in Portfolio
Morningstar calls this fund a core investment.
Bill Gross has overseen the fund since its 1993 inception.
Managers PIMCO Bond Fund has an expense ratio of 0.58 percent.
According to Morningstar, the fund’s average duration is slightly higher than its benchmark, which could court more interest rate risk.