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2 Core Bond Funds With a Knack for Navigating the Markets

Management's strong background in credit analysis has enabled Silver-rated Western Asset Core Bond and Core Plus Bond to achieve impressive long-term results.

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Sumit Desai: The team that manages the Western Asset Core Bond (WAPIX) and Western Asset Core Plus Bond (WACIX) funds earned our 2014 Fixed-Income Fund Manager of the Year award and have followed up their strong performance last year with another strong year in 2015.

Both of these funds earn a Morningstar Analyst Rating of Silver thanks to the team-based approach they take to managing the portfolios. In our opinion, the team behind these funds has shown a knack for understanding market trends and oftentimes takes the opposite side of consensus bets.

Further, the firm's strong background in credit analysis means the portfolios will often carry sizable positions in out-of-benchmark holdings like emerging markets, high yield, and nonagency mortgages.

Both the Core and Core Plus funds are run fairly similarly, with the Core Plus strategy allowing for even more flexibility around these sectors. That said, both funds maintain an overall investment-grade credit-quality profile.

This strategy can increase the volatility of the funds compared with more-conservative peers in the intermediate-term bond category. However, over time, the team has navigated the risks in the portfolio toward impressive long-term results.

The funds are in or near the top decile of the intermediate-term bond category over the trailing one-, three-, five-, and ten-year periods. All told, these funds are worthy options to consider as core fixed-income holdings within a well-diversified portfolio. 

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