We build funds by thinking about the ultimate source of income:
Rates
Interest-rate risk (also called term structure risk) is a bond’s sensitivity to changes in the level, slope, and shape of interest rates.
Credit
Credit risk is the possibility a borrower may fail to make payments to investors.
Prepayment
Prepayment risk involves borrowers paying off debt early, typically in a falling-rate environment, which reduces the number of payments and amount of interest received by investors.
Liquidity
Liquidity risk refers to the relative difficulty of trading a security in a reasonable amount of time.
We believe attractive opportunities exist outside of the index
The Bloomberg Barclays U.S. Aggregate Bond Index is a benchmark for many bond funds, but our active teams believe many sectors in the index have high interest-rate risk and unattractive total return potential. Our analysts look outside the index for better fixed-income investment opportunities.
The economy and interest rates
March 2021
Analyst Onsel Emre, Ph.D., a member of the Macro & Sovereign Credit Team, explains today's inflation dynamics and the post-pandemic recovery in different parts of the world.
Update on Income Fund and Diversified Income Trust
March 2021
Michael Salm, Co-CIO of Fixed Income, describes these multi-sector funds and their active interest-rate strategies as the economy reopens.
We can find diverse opportunities because we have a team with diverse experience
Over 80 fixed income professionals analyze investments across specialized teams
- Credit Research
- Corporate & Tax-exempt Credit
- Macro & Sovereign Credit
- Short Term Liquid Markets
- Structured Credit
- Portfolio Construction
- Risk Management
We offer funds with different benchmarks and portfolio construction approaches
| Funds | YIELDS 30-day SEC yields as of 03/31/21 |
INTEREST RATE RISK Average effective duration as of 03/31/21 |
Overall Morningstar RatingTM as of 03/31/21 |
|---|---|---|---|
| Diversified Income Trust | -0.63 yrs. | (out of 270 in category) | |
| Floating Rate Income Fund | 0.10 yrs. | (out of 232 in category) | |
| Global Income Trust | 5.46 yrs. | (out of 181 in category) | |
| High Yield Fund | 3.23 yrs. | (out of 630 in category) | |
| Income Fund | 5.14 yrs. | (out of 540 in category) | |
| Short Duration Bond Fund | 1.79 yrs. | (out of 516 in category) |
Duration measures the sensitivity of bond prices to interest-rate changes. A negative duration indicates that a security or fund may be poised to increase in value when interest rates increase. For correlation, numbers less than 1 indicate a diminishing correlation. The maximum correlation is 1 and the minimum is 0, with values between 0 and -1 indicating negative correlation.
The Morningstar Rating™ for funds, or "star rating," is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and ten-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36 to 59 months of total returns, 60% five-year rating/40% three-year rating for 60 to 119 months of total returns, and 50% ten-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the ten-year overall star rating formula seems to give the most weight to the ten-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Ratings do not take into account the effects of sales charges and loads.