The search for yield has never been tougher. The 10-year Treasury Rate is below 1% per year.
As a retiree of eight years now, with today marking Happy Medicare Day, I’m acutely aware for myself and many fellow retirees.
Fortunately, nearly all of the 140 Core Bond mutual funds through September in our Lipper (Refinitiv) database yield more than that 1%. And while none of these funds are “risk free” and many suffered drawdowns of 5% or more in March (even more intra-month), nearly all have delivered absolute returns of 2.5% or more this past year. Thank you, Mr. Powell.
To be balanced, inflation remains low, as does energy and mortgage rates … the latter at 50-year lows.
Return Greater Than Yield
Some investors care less about dividends from their bond funds and more about total return (appreciation plus yield). It’s more reassuring to me to see return consistently exceed yield. For example, there are 118 High Yield Bond mutual funds that have paid yields as high as 7% these past 12 months, but only 18 have returned more than their yield.
Here are the top returning five of those 18. Two are from the Diamond Hill fund family. Two are MFO Great Owls and one, RBC BlueBay High Yield Bond I (RGHYX), is also on the MFO Honor Roll list, which means it has consistently delivered top quintile absolute and risk-adjusted performance.
This new selection criterion is one of several added to the MultiSearch tool on the MFO Premium site this month. Others include Yield Ratings and Sector Allocations.
Yield Ratings
Similarly, there are nearly 100 Multi-Sector Income mutual funds. They are very popular with retirees. The most popular by far being PIMCO’s Income Fund (PIMIX). Its performance this past year has not beaten its yield, unlike the next most popular Guggenheim Total Return Fund (GIBIX).
Only three funds with top quintile yield in this category have beaten their yield this past year, as shown below. They include Catalyst Enhanced Income Fund (EIXIX).
Sector Allocations
Another screening feature this month is the ability to search for funds by Industry Sector allocation. Refinitiv currently provides 10 sectors and will be expanding to 11 next month. MultiSearch users can screen funds for any combination of sector allocations. For example, there are 24 mutual funds that allocate more than 20% of their portfolios to both Technology and Consumer Goods … although these days it can be hard to know the difference (e.g., Amazon). Here are the top three performers year-to-date, the best of which is Prudential PGIM Jennison Global Opportunities Fund Z (PRJZX), another MFO Great Owl:
One last new feature worth mentioning is the ability to screen for both return value and rating, separately. So, for example, MultiSearch users can specify a return value, like 9% per year, and also require funds have top quintile returns in category. This can be helpful in screening out under-performing categories and bear cycles.
MultiSearch now enables fund searches with over 100 screening criteria across some 60 evaluation periods. You can view the 40 screenshots highlighting all the site’s features in the upper right corner of the Welcome page.
Please enjoy the latest!
