Four Great Bond Managers on a Roll
Front-runners for Fixed-Income Manager of the Year.
Front-runners for Fixed-Income Manager of the Year.
With stocks rallying and bonds giving back their gains, bond fund managers are moving out of the spotlight. For a while there, they were the fund world's heroes, as falling rates led to some nifty returns while most stock funds sank deep into the red. Even so, I can find many worthy candidates for Fixed-Income Manager of the Year. In my book, making money in a flat market is just as important as providing big upside in rallies.
Following are some of the leading candidates for Morningstar's bond fund Manager of the Year award. We look for strong single-year and long-term performance as well as a shareholder-friendly approach. One word of warning, bond fund returns are tightly bunched this year, so the leaders' lists for 2003 will no doubt shift quite a bit over the next five months.
Fidelity’s muni team, Fidelity Spartan Municipal Income (FHIGX)
They were runners-up for the award last year, and they're looking mighty good this year, too. All of their 16 funds have posted above-average returns, and 12 of those 16 are in the top quartile for the year to date. Over the trailing three- and five-year periods, 15 of those funds are in the top quartile, and the 16th isn’t there because it was launched two years ago. The group is led by Christine Thompson, who has focused on issue selection rather than big bets on the direction of interest rates or credit-quality shifts. It's a cautious strategy, but good research and low costs have made for compelling results.
Margie Patel, Pioneer High Yield A (TAHYX)
Check out the graph on this fund’s Quicktake Report. You don't often see a bond fund that has run away from its index like this one has, but Patel has done a remarkable job. The fund is up nearly 20% this year, and it has returned 12.54% annualized over the past five years. Patel takes a maverick's approach to high-yield investing. She invests most of the fund's assets in busted convertible bonds. These are convertible bonds that act like regular bonds because the stock's price has fallen so much that the right to convert the bond into stock is of little value. A rally in lower-quality debt has this fund riding high after a sluggish 2002.
Western Asset’s management team, Western Asset Core (WATFX)
This fund has delivered strong results through credit selection, sector rotation, and yield-curve plays. This year a rally in corporate debt has boosted the fund to nice gains. Western Asset isn't well known to most investors, but it is one of the biggest institutional bond managers. This fund's long-term record shows why. It's in the top decile of its category for the trailing three, five, and 10 years. (If you can't get into the above share class try (WAPIX), which is available for a $2,500 minimum.)
Andrew Dudley, Fidelity Short-Term Bond (FSHBX)
With rising rates a real threat, you may have taken shelter in a short-term bond fund. If you're lucky, you picked this offering, where Andrew Dudley has made the most of the low-yield environment. He's beating the average short-term fund by a sizable margin (by short-term bond standards).
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals
and individual investors. These products and services are usually sold through
license agreements or subscriptions. Our investment management business generates
asset-based fees, which are calculated as a percentage of assets under management.
We also sell both admissions and sponsorship packages for our investment conferences
and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.