Emory Zink: American Funds Bond Fund of America--a solidly core bond fund in the firm's fixed-income suite--has significantly evolved post-financial crisis. For example, a decade prior, the fund took more credit risk and could hold up to 20% in noninvestment-grade debt. But as leadership embraced a more conservative goal, that limit came down to 10%. Instead of leaning on credit risk, the team tries to add value through other means, such as modest interest-rate and yield-curve calls relative to its Bloomberg Barclays Aggregate Index benchmark. These efforts are enhanced by an improved tool kit across the firm's fixed-income operations, including updated analytical tools, more robust quantitative risk systems, and coordinated macroeconomic guidance--all changes that have been under way for several years but more recently gained momentum and translate to improved prospects at this firm.
These resources and process adjustments, combined with the fund's low fees and conservative profile, instill confidence and underpin the fund's recent Morningstar Analyst Rating upgrade from Neutral to Bronze.
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Emory Zink does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.