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This Core Bond Fund Is on Our Radar

Over the past five years, Frost Total Return Bond has managed to outpace both the short- and intermediate-term bond peer groups despite its light exposure to corporate bonds.

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Brian Moriarty: One fund that has been on our radar is Frost Total Return Bond, ticker FATRX. The fund currently falls into the short-term bond category because the manager has kept duration short in recent years, but it should also be compared to the intermediate-term category because it is designed to form the core of a bond portfolio.

Over the trailing five years, its 3.4% annualized return has easily beaten the 2.1% return of the Bloomberg Barclays Aggregate Bond Index. It also outperformed more than 90% of peers in both the short-term and intermediate-term categories over the same period. 
It has managed that performance despite not holding a lot of corporate bonds, which have been one of the best-performing sectors in recent years. Rather, it has roughly 50% in securitized sectors, such as mortgages, CLOs, ABS, and CMBS. It is also barbelled, with roughly 30% in bonds rated triple B and below, offset by another 30% in cash and Treasuries.

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