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This Aggressive Core Bond Strategy Is Worth a Look

This Aggressive Core Bond Strategy Is Worth a Look

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.

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About the Author

Sarah Bush

Director of Investor Relations
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Sarah Bush is director of manager research for fixed-income strategies, North America. She oversees Morningstar’s fixed-income manager research team and follows a variety of taxable, high-yield, and bank-loan strategies from asset managers including DoubleLine, Fidelity, Loomis Sayles, and PIMCO. Bush is the lead analyst on the DoubleLine and Loomis Sayles fund families and Fidelity’s fixed-income offerings.

Before rejoining the firm in 2011, Bush served from 2006 to 2010 as director of development and then director of investor programs for IFF, a Community Development Financial Institution that provides loans and real estate consulting to nonprofits serving low-income communities in the Midwest. Previously, she spent four years at Prudential Capital Group, an investment arm of Prudential Financial, where she researched, recommended, and negotiated private placement debt investments. Bush originally joined Morningstar in 1997 as a mutual fund analyst.

Bush holds a bachelor’s degree in history and mathematics from the University of Wisconsin, where she graduated as a member of Phi Beta Kappa, and a master’s degree in business administration, with concentrations in finance, economics, and international business, from the University of Chicago Booth School of Business.

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