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This Aggressive Core Bond Strategy Is Worth a Look

Gold-rated Loomis Sayles Core Plus can require patience, but the team makes good use of its wide-ranging approach.


Sarah Bush: Loomis Sayles Core Plus may not be as famous as its sibling, Loomis Sayles Bond, but it's worth a look for those in search of an at times aggressive intermediate-term bond strategy.

The long-term managers here, Rick Raczkowski and Peter Palfrey, work independently of Dan Fuss and his team, but they share many of the same resources, including a very deep credit staff and significant investments in securitized and sovereign research.

The approach here is wide-ranging. The fund can hold up to 20% in below investment-grade debt, also invests heavily in emerging-markets corporates at times, and sprinklings of nondollar currencies. That can leave the fund open to periods of underperformance. During 2015, for example, the fund lost 4% trailing many of its peers as investments in energy-related credits and emerging-markets currencies--including the Brazilian real and Mexican peso--hurt. Fortunately, however, over the long haul the record here has been very strong, and the team has made good use of its wide-ranging approach.

During 2016, for example, those same energy-related corporates paid off and the fund also benefited from a well-timed move to reduce its interest-rate sensitivity during the summer, helping it hold up relatively well in the fourth quarter as bond yields rose.

This fund can require patience, but its thoughtful approach, long-tenured management team, and improving expense profile all stand behind its Morningstar Analyst Rating of Gold.

Sarah Bush does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.