4 / 5 Stars
5 5 5 5 2
Zacks Investment Research
Standard & Poor's
4 / 5 Stars
#33 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 4.55 percent over the past year, 4.18 percent over the past three years, 6.92 percent over the past five years, and 6.23 percent over the past decade.
|Trailing Returns||Updated 06.30.2014|
|Year to date||3.8%|
|3 Years (Annualized)||4.2%|
|5 Years (Annualized)||6.9%|
|10 Years (Annualized)||6.2%|
Despite a dramatic management shakeup, it's been smooth sailing as of late for TCW Core Fixed Income.
As of July 03, 2014, the fund has assets totaling almost $1.18 billion invested in 395 different holdings. Its portfolio consists of a broad mix of fixed-income holdings, including treasuries, mortgage-backed securities, and corporate bonds.
Recently, this intermediate-term bond fund has done quite well despite a high-profile management change. In December 2009, TCW fired star manager Jeffrey Gundlach. In addition to serving as the firm's chief investment officer, Gundlach had helmed this fund as well as TCW's flagship Total Return Bond Fund. A number of key fixed-income analysts followed Gundlach out the door, touching off concern about the health of TCW's bond lineup. Upon announcing Gundlach's ouster, TCW confirmed its plans to acquire the asset management firm Metropolitan West. MetWest's Tad Rivelle took over this fund, and despite some initial jitters on the part of investors, the transition has been quite smooth. Since assuming his position, Rivelle has introduced into the portfolio the use of commercial mortgage-backed securities and has increased the fund's exposure to financial-sector corporate bonds. Through the second quarter, the fund had returned nearly 7 percent. That was good enough to land it in the top 15 percent of Morningstar's intermediate-term bond category for that time period. The fund has returned 4.55 percent over the past year and 4.18 percent over the past three years.
Historically, this fund has generally done a good job of navigating the bond market. Still, it has had its fair share of disappointing stretches. Since 2000, it has landed in the bottom 10 percent of its Morningstar category in two separate years. But even in its off years, the fund has still typically earned money for its investors. Notably, the last time the fund ended the year in the red was in 1999. The fund has returned 6.92 percent over the past five years and 6.23 percent over the past decade.
According to the fund's prospectus: "In managing the Fund's investments, under normal market conditions, the portfolio managers use a controlled risk approach. The techniques of this approach attempt to control the principal risk components of the fixed income markets and include consideration of: security selection within a given sector, relative performance of the various market sectors, the shape of the yield curve, [and] fluctuations in the overall level of interest rates." Recently, management dialed down the average duration of its holdings in anticipation of rising interest rates.
Role in Portfolio
As its name implies, this fund is designed to be a core holding within a fixed-income portfolio.
Tad Rivelle of Metropolitan West took over in late 2009. Despite the high level of turnover at TCW, some members of the fund's team have stayed in place through the transition. TCW's James Hassett, for instance, has kept his role as co-manager of the fund. Hassett, who has been a co-manager since 2006, is in charge of the high-yield portion of the portfolio.
TCW Core Fixed Income Fund has an expense ratio of 0.44 percent.
One of the biggest risks for bond funds is the potential for rising interest rates. As interest rates go up, bond prices decline.