5.9 in Short-Term Bond
U.S. News evaluated 111 Short-Term Bond Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
| Scorecard | |
|---|---|
| Morningstar | 5 / 5 Stars |
| Lipper | 5 5 4 4 1 |
| Zacks Investment Research | 4 (Sell) |
| Standard & Poor's | 3 / 5 Stars |
| TheStreet.com | E+ (Sell) |
Fund Overview
Just like with law and sausages, with Thompson Plumb Bond, the final outcome is a lot easier to look at than the process it takes to get there.
As of April 04, 2012, the fund has assets totaling almost $808.47 million invested in 503 different holdings. Its portfolio consists largely of corporate bonds.
Lately, this fund has been on a corporate bond binge. As of the end of September 2010, more than 80 percent of its bond holdings were of the corporate variety. Since 2009, this strategy has worked out tremendously well, but management's penchant for corporate debt has also gotten the fund into plenty trouble in the past. That's what happened in 2008, when the fund finished the year in the red.
Another distinctive feature about this fund is its cash stake. About 30 percent of its assets are currently in cash, more than twice the average for Morningstar's short-term bond category. Looking forward, this fund is well positioned for rising interest rates. While interest rates are still at historic lows, it's just a matter of time before they start creeping back up. When that happens, funds with shorter durations will feel less pain since they're not as sensitive to rate changes. The fund has returned 4.77 percent over the past year and 12.69 percent over the past three years.
Despite a few disastrous years, this fund's long-term numbers are hard to argue with. As of the end of September, its trailing three-, five-, and 10-year returns all landed it in the top percentile of Morningstar's short-term bond category. Over time, the fund has shown little aversion to risk taking. As of late September 2010, for instance, almost 59 percent of its bond holdings were rated BBB, the lowest rating still considered to be investment grade. Meanwhile, the fund has avoided U.S. treasuries. "Thompson Plumb Bond has a top-notch long-term record but can require a strong stomach," Morningstar says in its latest report on the fund. The fund has returned 7.82 percent over the past five years and 6.40 percent over the past decade.
| Trailing Returns | Updated 03.31.2012 |
|---|---|
| Year to date | 3.5% |
| 1 Year | 4.8% |
| 3 Years (Annualized) | 12.7% |
| 5 Years (Annualized) | 7.8% |
| 10 Years (Annualized) | 6.4% |
Investment Strategy
The fund isn't afraid to make sector bets. Currently, it's placing a lot of faith in corporate debt. It also stretches for yield at the lower end of the investment-grade spectrum. According to its prospectus, it can keep up to 10 percent of its assets in junk bonds, but its current allocation is far lower than that. Meanwhile, management isn't averse to keeping a sizeable chunk of the portfolio in cash.
Role in Portfolio
Morningstar calls the fund a "supporting player."
Management
John Thompson, James Evans, and Jason Stephens manage the fund.
Performance
The fund has returned 4.77 percent over the past year, 12.69 percent over the past three years, 7.82 percent over the past five years, and 6.40 percent over the past decade.
Hypothetical Growth of $10,000
Updated 03.31.2012
Holdings
The fund invests in bonds with short durations. It has a penchant for corporate debt.
Asset Allocation
| % Long | % Net | |
|---|---|---|
| Cash | 8.59 | 8.59 |
| Stocks | 0.09 | 0.09 |
| Bonds | 79.33 | 79.33 |
| Other | 0.0 | 0.0 |
| Foreign Bonds | 9.36 | 9.36 |
| Foreign Stocks | 0.0 | 0.0 |
| Convertible | 2.63 | 2.63 |
| Preferred | 0.0 | 0.0 |
Updated 12.31.2011
Top Holdings
Performance as of 03.31.2012
Portfolio as of 12.31.2011
| % Net Assets | |
|---|---|
| Comp Sciences 6.5% | 2.18 |
| Owens Corning New 6.5% | 2.17 |
| Reckson Oper Partnership L P 5% | 2.16 |
| Wynn Las Vegas Llc / Wynn 7.875% | 2.16 |
| Brocade Comms Sys 6.625% | 2.13 |
Fees
Thompson Plumb Bond Fund has an expense ratio of 0.80 percent.
Risk
This fund has a short average duration, so it's well positioned for interest rate hikes. Still, management's reliance on BBB debt does come with some risks.
