MFOHome About Commentary Discussions Funds The Best Resources Support Us!

Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

Sign In Register

Categories

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Once Again - Scout Unconstrained Bond Fund - Where's the Dividend?

mnzdedwardsmnzdedwards
edited August 2013 in Fund Discussions
To all MFOs,

I'm a little concerned about the past two month's distributions from the Scout Unconstrained Bond Fund (SUBYX). The fund has a NAV of 11.70. And yet the most recent monthly distribution was a minuscule .001. Not even a penny a share! This results in a distribution yield of 0.11% - Whoa! Not exactly what I expected from an unconstrained bond fund.

Now this is quite disconcerting to me because I'm concerned the fund managers are spending less time researching and investing in bonds and are more interested in using futures to manipulate the fund's duration. Am I invested in a market-timing bond fund or am I being a little paranoid?

Regards,
Concerned shareholder who is considering switching to OSTIX - Osterweis Strategic Income Fund.
Mike_E

Comments

  • mns
    Scout Unconstrained's objective is "to maximize total return consistent with the preservation of capital." Looking beyond the income distributions to total return, the fund has held up reasonably well. It's gained 1.64% YTD, compared to -0.93 for DBLTX, and -3.08 for PTTRX. Given their negative duration stance, it looks like they're focused more on capital preservation than income at the moment which seems like a reasonable and prudent stance. This is probably not the best fund for yield, the unconstrained flexibility could send Egan and team to odd corners of the bond market like zero coupon bonds or last cash-flow tranches of CMOs, wherever there may be value.
  • Old_Skeet
    Hi Mike E,

    Perhaps the fund manger(s) spent it through the deployment of defensive strategies to maintain the NAV ... and, with this, there was little left to send on to the shareholders.

    I went to short duration income funds (3) and multi sector income funds (3) in my income sleeve rather than trying to pick funds that have fancy dancy defensive strategies. After all an income fund has to make its way from yield, in most cases, and if yields are low then it does not take much to use up the yield in management expense and the cost for defensive strategies.

    Just my guess ...

    Skeeter
Sign In or Register to comment.