4 / 5 Stars
5 5 5 3 1
Zacks Investment Research
Standard & Poor's
5 / 5 Stars
#6 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 1.55 percent over the past year, 2.70 percent over the past three years, 5.72 percent over the past five years, and 3.83 percent over the past decade.
|Trailing Returns||Updated 02.28.2014|
|Year to date||0.6%|
|3 Years (Annualized)||2.7%|
|5 Years (Annualized)||5.7%|
|10 Years (Annualized)||3.8%|
Fund manager Doug Kern describes the Homestead Short-Term Bond Fund as a happy medium for investors who want higher returns than a money market fund offers but less volatility than they would experience with a longer-term bond fund.
As of March 05, 2014, the fund has assets totaling almost $541.76 million invested in 449 different holdings. Its portfolio consists of high-quality, short-term bonds with dollar-weighted average maturities of no more than three years.
In 2008, the fund lost a little money as the bond markets faltered, but came back with a double-digit return in 2009. After getting burned by mortgage-backed securities in the housing market collapse, Kern has trimmed his positions in that sector from about 21 percent of assets to about 14 percent. "Part of that is just the normal amortization of mortgage investments, and part of it is that I'm just not looking in that sector as hard as I used to," Kern says. "Maybe I'm still a little distrusting."
Kern will also venture into some beaten-up sectors, most recently bonds backed by car loans, one of the best performing sectors for the fund in 2009. "Yield went from around 5 percent to 20 percent," he says. "They've made a total round trip and then some." Another example of the fund's foray into out-of-favor sectors is its recent investment in BP. In June 2010, Kern invested about 2.5 percent of assets in BP, but says he doesn't like to go "hog-wild on any one name." As of October 2010, the fund had a sizeable cash position, which Kern says is not necessarily a defensive tactic--it's due to a lack of good opportunities. The fund has returned 1.55 percent over the past year and 2.70 percent over the past three years.
Over the longer term, the fund has returned 5.72 percent over the past five years and 3.83 percent over the past decade.
Manager Doug Kern aims to invest at least 80 percent of total assets in high-quality, short-term bonds to generate income while controlling price fluctuation. "This fund has a short weighted average maturity, which should reduce the impact of interest rate changes on the Fund's share price," Kern says on the fund's Web site.
Role in Portfolio
Morningstar has not assigned a role to this fund.
Douglas Kern has been the fund's manager since its 1991 inception.
Homestead Funds Short Term Bond Fund has an expense ratio of 0.76 percent.
Investing in high-yield bonds may subject the portfolio to greater credit and market risks.