3 Bond Fund Picks for Retirees
These funds can generate income and provide ballast against stock market swings in retiree portfolios.
Susan Dziubinski: I'm Susan Dziubinski for Morningstar.com. Bond funds can serve many purposes in the portfolios of retirees. For one, they throw off much needed income. They also can provide some ballast against stock market swings. Morningstar director of personal finance Christine Benz includes a handful of bond funds in her model portfolios for retirees. Here are some of them.
Emory Zink: Portfolio managers Rob Galusza and Julian Potenza benefit from the breadth and depth of resources as they allocate to a mix of Treasuries, agencies, and high-quality corporate credit in Fidelity Short-Term Bond. The firm's robust teams of securitized and corporate credit analysts as well as quantitative risk tools complement the portfolio managers' shrewd analysis of their opportunity set, which often includes careful attention paid to overnight rates, repo rates, and money market funds. The fund tends to tilt higher credit quality than its typical peer, and it also tends to have shorter duration given that it tracks its Bloomberg Barclays 1-3 Year Government Credit Index rather closely. What this means is that in periods of risk-on fervor, the fund will probably lag peers that take greater latitude in terms of duration, credit quality, and out of benchmark fare. But when markets turn rocky, this particular fund should outperform that same group, and this should contribute to stronger risk-adjusted returns over time.
Susan Dziubinski does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.