Subtle Differences Separate These 2 Fine Bond Funds
Despite their differences, Loomis Sayles Bond and Loomis Sayles Strategic Income both demand patience and a long-term perspective, says Morningstar's Sarah Bush.
Despite their differences, Loomis Sayles Bond and Loomis Sayles Strategic Income both demand patience and a long-term perspective, says Morningstar's Sarah Bush.
Sarah Bush: Gold-rated Loomis Sayles Bond and Silver-rated Loomis Sayles Strategic Income share much in common, but differences in their risk profile could have an impact on their long-term results.
Both funds are managed by the same well-resourced team, anchored by bond fund legend Dan Fuss and veterans Elaine Stokes and Matt Eagan. They both take a contrarian, often value-based approach to investing and aren't afraid to hold significant stakes in high-yield credit and non-dollar currencies. This approach and the strong team has led to strong results over the long term, although both funds are vulnerable to bouts of underperformance when credit markets turn south or when non-dollar currencies struggle.
That said, there are some key differences between the two portfolios, and Loomis Sayles Strategic Income is clearly designed to be the more aggressive of the two. Loomis Sayles Strategic Income, most notably, holds a relatively large allocation to equities. This stake has around as high as 20% of assets in recent years compared with high-single digit stakes in Loomis Sayles Bond. Equities add risk to an already credit-sensitive portfolio and contribute to both funds, but particularly, Loomis Sayles Strategic Income's high correlation to the S&P 500.
Interestingly, that difference has narrowed some in recent months and it will be interesting to see how different the funds are going forward. That said, for prospective investors in either funds, it's important to take a patient approach and to be prepared for volatile performance.
Sarah Bush does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.