Sarah Bush: Loomis Sayles Core Plus may not be as famous as its sibling, Loomis Sayles Bond, but it's worth a look for those in search of an at times aggressive intermediate-term bond strategy.
The long-term managers here, Rick Raczkowski and Peter Palfrey, work independently of Dan Fuss and his team, but they share many of the same resources, including a very deep credit staff and significant investments in securitized and sovereign research.
The approach here is wide-ranging. The fund can hold up to 20% in below investment-grade debt, also invests heavily in emerging-markets corporates at times, and sprinklings of nondollar currencies. That can leave the fund open to periods of underperformance. During 2015, for example, the fund lost 4% trailing many of its peers as investments in energy-related credits and emerging-markets currencies--including the Brazilian real and Mexican peso--hurt. Fortunately, however, over the long haul the record here has been very strong, and the team has made good use of its wide-ranging approach.
During 2016, for example, those same energy-related corporates paid off and the fund also benefited from a well-timed move to reduce its interest-rate sensitivity during the summer, helping it hold up relatively well in the fourth quarter as bond yields rose.
This fund can require patience, but its thoughtful approach, long-tenured management team, and improving expense profile all stand behind its Morningstar Analyst Rating of Gold.