I've been researching via Fidelity and M* for alternatives to MWTRX. I've owned the fund for several years but with performance pretty close due to current market conditions in Fixed Inc, I'm always 'shopping'. Duration, Avg Maturity, Bond Ratings and Expenses are what I've been focused on.
The 2 Int Core Plus Funds that I have zeroed in on are BCOIX and DODIX. I alraedy own DODIX in an IRA Rollover and love the consistency. Other OEF's I've researched are Western, Pru, American, Pimco etc...I worked for Pru for years so I know their funds intimately.
Any other criteria and ideas that you like as much or more than BCOIX? The expense ration alone is more than 1/2 what MWTRX is along with higher credit quality.
Thanks in advance!
Comments
You might take a look at FTBFX. As a Fidelity fund, the short term/excessive trading restrictions are different than non-Fidelity funds at Fidelity. Not a criterion I would use for a fund in this category, but still a differentiator. And a fine fund generally.
A fund that was brought up recently in another thread is WCPNX. It's having a spectacular 2021 (for a bond fund). Though if one disregards the past year, most of the funds you're looking at (with the notable exception of MWTRX) have had similar returns over the lifetime of WCPNX.
So the question is whether this past year is an anomaly or a sign of better things to come. Note that it has the highest volatility of the funds mentioned.
Which brings us to the criterion of risk. You referenced it implicitly ("love the consistency"); it's worth calling out as an explicit criterion. Here's a page that should help make comparing risk metrics on various funds easy:
http://performance.morningstar.com/fund/ratings-risk.action?t=BCOIX
What I notice when I drop in some other funds is that BCOIX tends to be a bit above average (compared with the other funds I'm looking at) in risk - a higher (but not highest) standard deviation (MWTRX is toward the lowest) resulting in slightly lower Sharpe and Sortino ratios.
Regarding credit risk - M* has an interesting way of calculating risk. Instead of assigning 1 to A rated bonds, 2 to B rated bonds, and so on, M* assigns numbers to each credit rating based on how sensitive bonds with that rating are to market changes. It turns out that BBB bonds are much more sensitive than A bonds. So a few BBB bonds can pull the down average credit rating of a whole portfolio.
I like this way of computing the average credit rating of a portfolio, but many do not. 68% of the bonds in MTWRX are rated AAA, nearly 80% are A or better. And only about 6% are junk. But that smattering of junk is enough to pull its portfolio credit rating down to BBB.
In contrast, BCOIX has only 46% of bonds rated AAA, and 65% are A or better. But since it has only about 4% in junk bonds, those A (or better) bonds are good enough to keep the fund's average rating at an A.
Baird and D&C are both very good funds. WRT funds at Fido, here are a couple core/core+ funds you may wish to consider/evaluate as to suitability:
GIBLX. These guys tend more to make "high conviction" (read riskier) bets then some other funds. Nothing too wild. And they are usually right, if not immediately, then eventually.
PTIAX = I like the way these guys think/explain their positions. They tend to own pieces of the bond market which other funds don't. To that extent they could serve as a diversifier vs. other bond fund positions.
OMBAX. (mortgage) Actively-managed, since there is little credit risk/spreads, the managers throttle portfolio duration up/down depending on their outlook for the direction of rates. They are adept at this. I've been using this (along with another fund I will discuss below) as a place to park cash for a couple years. Duration is presently less than 1/2 of the AGG. It has discretion to shift duration 2-10 years. They generally take on duration ONLY when they are compensated to do so.
I think PIMCO funds should be given careful consideration. PIMCO is Bill Gross' enduring legacy. Fidelity offers "A" shares. If you have serious money in bond funds, I would encourage buying institutional-class shares. Many are available at Wellsfargo/Wellstrade for no minimums.
PIMIX - my longest-lived, and 2nd largest fund position. As a multi-sector fund, its more volatile than the "core-plus" funds. But its returns justify the modestly higher volatility.
PTRIX (mortgage). My largest bond position. Its among the least-known of PIMCO funds - M* perennially mis-classifies the fund as 'core-plus". Because of its low risk profile its returns seem paltry vs much riskier "core-plus" offerings. PTRIX is really a short/inter govt fund. Like OMBAX (mentioned above), the managers make tactical interest rate bets. They excel at this. Duration moves 1-7 years. This fund is a bit more "free wheeling" than its sister GNMA fund PDMIX. Slightly better returns, edges out just a wee bit more on the risk scale with more non-agencies. Still, very safe. -- For those thinking "mortgages=BORING", keep in mind the "core bond funds" (MWTRX, PTTRX, etc) have been largely managed to be extremely safe "cash like" funds since the GFC. In the past 5 or so years, PTRIX has earned MWTRX-like returns with only 2/3 of the volatility...
good luck!
The 3 Bond Funds I own (1 in each) are DODIX, BCOIX and GIBLX...
GIBLX is in my 401k and this account s my active/tactical account where I take more risk and move $$$ around. The Rollovers are pretty stable and I like to make minor adjustments.
Next move is to find a Fund to pair with GIBLX in my 401k...I've owned PIMIX in the past and have looked at PTIAX too. I have been tracking TCEIX but I can get that exposure with PIMIX...
Bond Funds are not as easy to research with their returns all muted in the past 5 years and not knowing whats under the hood. Cash isn't cash and Gov't issues could be multiple securities. Derivatives, Sovereign/Non-Dollar denominated debt...
FWIW, I've owned several of the funds listed on this thread in the past but only have faith in/still hold ONE of them currently. It's my worst performing bond fund YTD, albeit still up a few %.
It's a solid long term holding, though it has at best been mediocre in the past three years relative to its peers (46th percentile). You can see that in this M* chart, which compares it to the average multisector bond fund (which it tracks very closely) and to the average high yield bond fund (which has greater volatility but otherwise follows a similar path).
https://www.morningstar.com/articles/834221/is-pimco-income-the-new-total-return
Allowab (non-advisory)
Commonwealth Universe
Mid Atlantic Capital Group
Pershing Retirement Plan Network
Raymond James
Raymond James WRAP Eligible
Vanguard NTF
Here is what dtconroe said about the fund in January 2020:
"The Bank Loan/Floating rate bond oef, that I would most likely invest in, is MWFRX/MWFLX. It is from a stable of bond oefs, offered by Met West, and it has an established history of being managed very conservatively, at least "conservative" for a sector HY bond category."
Since we are talking about HY bond funds, and the OP said to "Keep it coming", may I suggest also checking out OSTIX, a short term HY fund that according to M* is "[...] a unique high-yield offering with a strong risk-adjusted return profile, particularly over the longer term." It also rates the fund's risk as "low".
While its YTD total return is a respectable 5.14%, its 3, 5, 10 and 15 year returns range consistently between 5 and 6%. The fund's average effective duration is currently 2.28, and the standard deviation 5.74%.
OSTIX's consistent performance over the past 15 years recommends it as a possible long term holding. Thought it deserves to be mentioned.
Good luck,
Fred
NOTES:
BL is one of the 2021 outperforming bond categories referenced in my prior post on this thread.
We do NOT own any IC or IC+ OEFs currently or plan to own any in the near future. To them, given the state of the bond market and interest rates, we ask "What's the point?" The 10-yr at 2%-2+% would be a point we would consider them.
"The Bank Loan/Floating rate bond oef, that I would most likely invest in, is MWFRX/MWFLX. It is from a stable of bond oefs, offered by Met West, and it has an established history of being managed very conservatively, at least "conservative" for a sector HY bond category."
Yep, that is what I said in January, and M* does rate it as a "Low Risk" fund. M* does not seem to think as highly of this fund, based on its fund analysis commentary. So, when I listed FFRHX, PRFRX, and SAMBX, on this thread, I did so because M* fund analysis statements are very complimentary of these 3 funds. There are many good BL/FR funds, so it ultimately depends on what the OP would be comfortable with, after he does his own due diligence.
That would be M*'s artificial "intelligence" program. The one that doesn't like MWFLX because while its "view" of the fund's process is above average, and its "view" of the fund's management (people) is above average, it "regards" the fund family (MetWest/TCW as just average). Who here would look less favorably on a bond fund because it's part of the MetWest family?
We can go into a bit more depth on the process "analysis". The computer "opines" that the fund is overweight in corporate bonds. That's true. Bank loan funds are typically comprised entirely of corporates and cash. This fund happens to be more fully invested (less cash) than the typical bank loan fund. Nothing more significant than that.
It "observes" that the fund overweights BBB rated bonds relative to peers. A more complete observation would have been that it has 10% fewer B bonds, 3% more BBs, 6% more BBBs (so it has upgraded B bonds primarily to BBBs), and 6% more AAA(!) bonds in lieu of below B and unrated bonds. Curious how it missed the 6% overweight (relative) in AAAs.
It then claims that this upward shift in credit quality is not rewarded, because the portfolio is still scored B by M*. The M* computer has easy access to the actual numeric credit score that M* calculated. For all we know, the fund scored at the very top of M*'s B band and the typical bank loan fund scored near the bottom of the B band.
This part of the analysis is unstable because it uses broad credit quality bands rather than numeric scores. A small shift in portfolio could change a fund's average rating, and thus the computer's "view" from "not rewarded" to "richly rewarded".
M* does rate it as a "Low Risk"
Not just low risk, but volatility so low that it has higher 3 and 5 year Sharpe and Sortino ratios than FFRHX, PRFRX, and SAMBX. For those who feel one can eat risk adjusted returns
http://performance.morningstar.com/fund/ratings-risk.action?t=MWFRX
(add the funds you want to compare to see them all side by side on a single page)
Some investor's (NOTE: NOT naming any names here and NOT referring to anyone in particular on this tread) near obsession with "risk adjusted returns" is mind-numbing to me at times.
There's also that little (read, "significant") matter of "after-tax returns" (that is rarely discussed on forums) that also affects how much food is on the table (so to speak).
For full disclosure, I have invested in this category off and on for the last several years--SPFYX and SAMBX are 2 funds I have held in the past, before 2021. In 2021 I have owned several BL/FR funds including the following: AFRAX, EIFAX, MWFLX, FFRHX, and PRFRX, but currently I only own 1 fund from this category. At Schwab, their 2 BL/FR funds they recommend are FRFZX and SAMBX. The "hottest" and highest performing BL/FR fund YTD is OOSAX, likely a favorite for bond traders, but it has a somewhat checkered past and the fund investing strategy was changed significantly in 2020.
Because investors differ so much from each other in their investing style and due diligence approach, I am very reluctant to do much more than "suggest" this might be a category the OP "might" want to consider, and if interested he can do his own extensive due diligence. Good luck!
Great stuff folks!