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Fund Spy: Morningstar Medalist Edition

A Neutral-Rated American Funds Bond Fund That's Evolving

Recent developments at American Funds Intermediate Bond Fund of America are promising.

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On Nov. 1, 2013, managers David Lee and Fergus MacDonald replaced former manager David Hoag on  American Funds Intermediate Bond Fund of America (AIBAX). Hoag left the fund to focus on his main charge,  American Funds Short-Term Bond Fund of America (ASBAX).

As on its equity funds, Capital Research has long used a multimanager approach to steer its fixed-income funds, with multiple managers independently overseeing sleeves of a portfolio. Yet that approach hasn't worked out very well for American Funds taxable fixed-income funds, with most of the funds in the lineup sporting average to below-average long-term returns versus their Morningstar Category peers. The multimanager approach remains intact, but the manager change at Intermediate-Term Bond Fund of America, or IBFA, reflects a number of steps the firm is taking to tighten up the coordination across its fixed-income operation. Walking through the fund's Neutral Morningstar Analyst Rating gives a glimpse into what's afoot.

Michael Herbst does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.