Tue, 6 Sep 2016
The bronze-rated fund checks all of the boxes for what a core-bond fund should be.
Brian Moriarty: TIAA-CREF Bond fund, which has a Morningstar Analyst Rating of Bronze, is a solid choice for investors looking for a core fixed-income holding. From our perspective, a core bond fund should have moderate interest-rate risk, hold primarily investment-grade debt, and be well diversified across sectors such as corporate bonds, mortgages, securitized assets, and government debt. TIAA-CREF Bond Fund meets those requirements.
The fund is managed by Joe Higgins, who has been with TIAA since 1995 and became lead manager in August 2011. From the time he took over through July 2016, the fund's 4.3% annualized return beats both the Barclays Aggregate Bond Index and the intermediate-term bond category by about 1%.
Higgins is allowed to invest up to 10% in high yield bonds, but he has traditionally kept that allocation in the low or midsingle digits. He also keeps duration close to the Barclays Aggregate Bond Index and doesn't make extreme bets on the direction of interest rates.
The intermediate-term bond category is very competitive, and there are a number of attractive core offerings to choose from. This fund is one of them.