3 / 5 Stars
2 2 1 4 1
Zacks Investment Research
Standard & Poor's
2 / 5 Stars
#47 in World Bond
U.S. News evaluated 100 World 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 -1.70 percent over the past year, 1.72 percent over the past three years, 7.01 percent over the past five years, and ((UNHANDLED FORMAT TYPE: percents, NoneType for None)) over the past decade.
|Trailing Returns||Updated 10.31.2013|
|Year to date||-2.5%|
|3 Years (Annualized)||1.7%|
|5 Years (Annualized)||7.0%|
|10 Years (Annualized)||N/A|
The ING Global Bond fund has beat the competition more times than not since its launch in mid-2006. By using a quick-turnover model, management has the agility to transition between higher-returning, fixed-income asset classes to balance high returns with principle protection.
As of November 05, 2013, the fund has assets totaling almost $585.54 million invested in 478 different holdings. Its portfolio consists of mostly investment-grade corporate bonds, foreign government bonds, residential mortgage-backed securities, and U.S. government debt.
This fund’s objective is to maximize its total return by holding income-producing bonds and selling others that have appreciated significantly. The fund uses a high-turnover strategy, which involved holding the average security for just three months in its most recent fiscal year, according to its prospectus. The fund escaped much of the recent mayhem in European sovereign debt because of its overweighting in corporate debt. The fund’s risk model tends to balance a plurality of the fund’s assets of the least risky AAA-grade bonds with a large holding of more risky BBB-rated bonds. The fund has returned -1.70 percent over the past year and 1.72 percent over the past three years.
Before the financial crisis, this fund loaded up on sovereign debt, and as a result sidestepped the carnage within the corporate and mortgage-backed sectors. Management generally favors investment-grade debt and invests in local currencies. The fund has a significant weighting in the U.S. because management currently favors the U.S. dollar as opposed to the British pound or the Japanese yen. “People ask why we like the dollar given all the problems that we have,” Diaz says. “My answer is it’s the best of a lot of poor choices.” Within the U.S., management is focusing on corporate bonds and high-yield bonds and avoiding investments in the Eurozone because of trouble in countries like Greece. Instead, the managers are looking to emerging markets—particularly the BRIC countries (Brazil, Russia, India and China) and Indonesia—for growth.
The fund’s big stake in Brazilian government debt—nearly 9 percent of its portfolio was made up of Brazilian bonds at the end of 2010—signals management’s heavy appetite for risk. Another example of this appetite is the fact although the fund owns nearly 300 securities, its top 10 holdings made up 30 percent of its assets at the end of 2010. This strategy seems to have worked thus far in the fund’s short existence. Its three-year annualized return places it in the top 14 percent of international bond funds.
In normal market conditions, the fund invests at least 80 percent of its assets in international government and corporate debt. The fund invests less than 10 percent of its portfolio in below-investment-grade securities, favoring BBB-grade bonds or better. By buying and selling securities rather quickly, the fund seeks to protect itself from major volatility and realize capital appreciation immediately.
A young venture, the ING Global Bond fund was run by James Kauffmann for its first three years before being handed over to Christopher Diaz and Michael Mata in 2009. Although they co-manage the fund, Diaz deals with sovereign debt and derivatives at ING, while Mata designs fixed-income risk models for the company at large.
ING Global Bond Fund has an expense ratio of 0.90 percent.
With an average duration of just over six years, the fund’s holdings reflect a taste for longer-term bonds. This could backfire if interest rates rise, thus lowering the value of long-term bonds.