3 / 5 Stars
2 2 5 3 3
Zacks Investment Research
5 (Strong Sell)
Standard & Poor's
2 / 5 Stars
#82 in Short-Term Bond
U.S. News evaluated 122 Short-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 -1.03 percent over the past year, 1.31 percent over the past three years, 3.66 percent over the past five years, and 3.47 percent over the past decade.
|Trailing Returns||Updated 03.31.2014|
|Year to date||0.6%|
|3 Years (Annualized)||1.3%|
|5 Years (Annualized)||3.7%|
|10 Years (Annualized)||3.5%|
The Delaware Limited-Term Diversified Income Fund is a short-term bond fund with a larger appetite than most for high-yield junk bonds.
As of April 22, 2014, the fund has assets totaling almost $1.39 billion invested in 548 different holdings. Its portfolio primarily consists of corporate bonds and mortgage-backed securities, with a smaller portion of U.S. Treasury bonds.
The fund’s objective is total return, unlike many other short-term bond funds that commonly provide an income payout. The fund invests primarily in bonds with a maturity between one and three years. Because of low interest rates, management has geared a larger percentage of its portfolio toward below-investment grade bonds with higher coupon rates. Manager Roger Early said there are more opportunities to invest in solid companies in the high-yield sector since the financial collapse of 2008. An example: “Ford Motor [Company], a highly rated, high-yield bond, used to be investment-grade, offers a substantial yield advantage, and in our mind is moving toward a potential upgrade,” Early says. The fund has returned -1.03 percent over the past year and 1.31 percent over the past three years.
The fund invests at least 80 percent of its portfolio in investment-grade, fixed-income securities, such as U.S. Treasury bonds, U.S. agency bonds, and U.S. corporate bonds. It may invest up to 20 percent of assets in below-investment grade securities. The fund may also invest up to 20 percent of assets in foreign securities, including up to 10 percent of its assets in emerging market securities. At the end of August, however, it had just 10 percent of total assets in foreign government and corporate securities.
Around since 1985, the fund ranks in the top 21 percent of its category for 15-year returns. It has returned 3.66 percent over the past five years and 3.47 percent over the past decade.
The fund is a total return fund, and Morningstar describes it as a short-term, medium-credit quality fund. Its current strategy is to focus on the higher-yield, lower-grade corporate bonds of blue-chip companies that are in the process of deleveraging. Management believes in running a highly-diversified fund so that if any one portfolio segment fails, others hold up.
Paul Grillo has served as the primary fund manager since 1999. Roger Early joined him in 2007. The fund was launched in 1985.
Delaware Limited-Term Diversified Income Fund has an expense ratio of 0.82 percent.
Because the fund primarily invests in short-term bonds, which are much less volatile than longer-term bonds, it generally has a lower risk component. The fund is currently investing in a higher than usual number of junk bonds—those bonds rated below the BBB level.