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Fund Spy

4 of the Best Wide-Ranging Bond Funds

Performance has been all over the map in 2015.

Mentioned: , , , , ,

This has been an interesting year for multisector funds. They are wide-ranging funds with lots of flexibility. If that sounds like nontraditional or unconstrained bond funds, there’s one big difference: Multisector funds have actually generated strong returns rather than hype. Their five-year returns are double those of nontraditional bonds.

Rather than making big macro and duration bets like those common among managers in the non-traditional-bond Morningstar Category, multisector funds follow a more traditional, if wide-ranging, approach to bond management. They differ from the core bond Morningstar Category of interme­diate bonds by having 35%–65% in below-investment-grade debt. They also tend to invest more overseas, including in emerging-markets debt. In 2015, multisector funds have had rather widely dispersed returns because some regions and currencies have had strong gains while others are flat or negative.

Russel Kinnel has a position in the following securities mentioned above: PTTRX, LSBRX. Find out about Morningstar’s editorial policies.

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