Fund Spy

3 Bond Funds You May Be Tempted to Buy but Shouldn't

Miriam Sjoblom, CFA

It’s easy to identify funds with strong records. But as my colleague Russ Kinnel noted recently, it takes more than a strong record to earn a Morningstar Analyst Rating of Gold, Silver, or Bronze. Those medals reflect our expectation that a fund will be a standout performer in the future, and that requires a deeper investigation into a fund’s fundamentals to determine whether it has a sustainable competitive advantage. If our analysts aren’t convinced that a fund can continue to deliver strong results, they’ll assign it a Morningstar Analyst Rating of Neutral or possibly Negative.

When a fund with a great record earns a Neutral rating, we get questions. In the world of bond funds, the reason our analysts take a skeptical view of past performance often comes down to risk. We ask ourselves the following questions:

Miriam Sjoblom, CFA has a position in the following securities mentioned above: LSBDX. Find out about Morningstar's editorial policies.

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