Why We Nominated These 3 Bond Fund Managers
Learn what we look for in our annual awards.
Susan Dzubinski: Hi, I'm Susan Dzubinski with Morningstar.com. Morningstar recently awarded its 2020 Awards for Investing Excellence. Today, we're looking at three bond funds run by managers who were nominated this year.
Brian Moriarty: Metropolitan West Total Return Bond Fund is a great fund for investors because it really exemplifies what a core-plus fund is capable of. The fund is managed by some of the most experienced and skilled managers in the industry: Tad Rivelle, Steve Kane, Laird Landmann, and Bryan Whalen. This team was recently nominated for a Morningstar Investing Excellence Award and previously won Morningstar Fund Manager of the Year Award in 2005. What makes this team stand out is their commitment to value investing principles, specifically their willingness to buy discounted bonds and sell pricier ones, even if this makes the short-term performance look different from peers. Many competitors use a similar approach, but it's elevated here by both the managers' experience and their commitment to it, as well as the impressive supporting research capabilities at the firm.
Indeed, the team has demonstrated success across a variety of sectors, including corporate bonds, as well as both agency and nonagency mortgages, but also across time periods, deftly navigating a variety of difficult market environments, including 2008 and this most recent March 2020 sell-off. Indeed, over the trailing 15 years, the fund has beaten nearly every peer in the intermediate core-plus bond category.
Gabriel Denis: Mary Ellen Stanek, lead manager of Baird Aggregate Bond, has demonstrated exemplary stewardship and generated strong returns for investors over her long career. Over the nearly two decades she has managed the strategy, Stanek has been a staunch advocate for low fees, circumspect portfolio construction, and incentives to encourage career development among younger analysts on her team. Stanek and her team have shown a disciplined and risk-conscious approach to investment management since the strategy's inception in September 2000. Stanek and her core group of collaborators have long avoided making interest-rate bets, instead taking a duration-neutral approach relative to the Bloomberg Barclays U.S. Aggregate Bond Index. Rather than chasing yield through big macro bets or digging into riskier parts of the fixed-income market, she and her team seek to add value through sector rotation and security selection.
Though Baird Aggregate Bond's investment team doesn't claim the same scale as some of its larger competitors, Stanek's commitment to employee development, both on a personal and resource basis, fosters a tight-knit team culture with little turnover. These attributes have enriched the team's investment process over time, and Stanek's disciplined philosophy and willingness to add depth to the team's core areas of competence is uncommon and commendable. The long-term success of Baird Aggregate Bond provides compelling evidence for Stanek's ability to set the standard for investor alignment under her leadership. For the trailing 10-year period through May 2020, the institutional share class of Baird Aggregate Bond has posted an annualized total return besting over 90% of its typical intermediate core bond Morningstar Category peers.
Eric Jacobson: Pimco Total Return is still, after all these years, a great option. It delivers pretty much everything that Pimco has to offer in terms of its bond research in a package that's well-suited as a core offering for investors. Technically, it's in Morningstar's core plus--or intermediate term core plus--category, which means that it's centered around the high-quality part of the bond market but has the ability to bring in other things such as high yield and so forth. But the idea here is, take those things in proper measure for the risk profile of the fund but use all the resources that Pimco has.
One of the interesting features about this fund and a good one, of course, is that it's comanaged by Mohit Mittal, who we recently awarded our Rising Talent Award at Morningstar. Mohit recently took over after the retirement of Mihir Worah, and even though he's technically a new manager on the fund, he's very well regarded both in and out of Pimco. He's taken on a lot of different responsibilities over the last several years and manages a number of the other managers at the firm and is also widely respected as a terrific generalist, which means he's really well suited to a fund like this that, again, draws on the contributions from teams all over Pimco.
Susan Dziubinski does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.