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Some other taxable fixed-income mutual fund categories, not well represented in the AGG, with significantly different results per M* category return pages: multisector +7.6%, bank loan +9.2%, high yield +13.3%, emerging mkts +10.0%.
Short duration high yield funds (not a M* category): RSIVX +9.9%, OSTIX +11.0%.
Leveraged loans (also called bank loans or senior loans) are a particular type of floating-rate instrument. These are loans that are typically taken on by firms with higher existing levels of debt (hence the use of "leveraged" in the name). However, the loans are senior in the capital structure and are often secured by assets of the borrowing company.
Due to the floating-rate characteristics discussed previously, leveraged loans tend to perform well in environments of rising rates (or expected rising rates). http://seekingalpha.com/article/4033644-libor-1-percent-first-time-7-years-significant-level-leveraged-For the year, US junk bonds topped the list. Markit’s iBoxx Liquid High Yield Index surged 15.3% in 2016, beating the 12.8% increase for the number-two performer (US stocks via the Russell 3000) by a comfortable margin. The only loser among the major asset classes last year: cash (3-month T-bills), which inched down 0.1%.
Some other taxable fixed-income mutual fund categories, not well represented in the AGG, with significantly different results per M* category return pages: multisector +7.6%, bank loan +9.2%, high yield +13.3%, emerging mkts +10.0%.
Short duration high yield funds (not a M* category): RSIVX +9.9%, OSTIX +11.0%.
Basically you're looking at bond funds whose portfolios land them in the lower left corner of the style box (short term, junk)?
That covers a pretty broad swath of funds. Bank loan funds, obviously. More generally, any floating junk (since the float keeps effective duration small). Also some other funds of interest: DBLTX +2.17%, JUCTX +3.92%, ZEOIX + 4.32%, DFLEX +5.48%, TGBAX +6.61%, BXIAX +14.59%.
msf: "Basically you're looking at bond funds whose portfolios land them in the lower left corner of the style box (short term, junk)?"
Not exactly - MS and HY funds aren't necessarily short duration. Short junk like the two funds I mentioned is contained in the HY figures, along with other durations, but I tend to think of short junk as a separate category, similar to what M* and others do with IG funds of different durations.
But yes, the lower left box is loaded with fund options, which imho are good for diversifying a bond portfolio that's heavy on AGG-style vehicles.
P.S. Hadn't heard of that Barings fund before - looks like a good combo of corporates, loans, and asset-backed, if that's the usual breakout.
Comments
Short duration high yield funds (not a M* category): RSIVX +9.9%, OSTIX +11.0%.
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During periods of rising interest rates, the base rate will also increase, creating a coupon rate that keeps pace with current interest rates. Hence, the appeal of floating-rate loans in rising-rate environments.
Leveraged loans (also called bank loans or senior loans) are a particular type of floating-rate instrument. These are loans that are typically taken on by firms with higher existing levels of debt (hence the use of "leveraged" in the name). However, the loans are senior in the capital structure and are often secured by assets of the borrowing company.
Due to the floating-rate characteristics discussed previously, leveraged loans tend to perform well in environments of rising rates (or expected rising rates). http://seekingalpha.com/article/4033644-libor-1-percent-first-time-7-years-significant-level-leveraged-
src="https://staticseekingalpha.a.ssl.fastly.net/uploads/2017/1/2/saupload_gmi.02jan2017.png" />loanshttp://www.capitalspectator.com/major-asset-classes-december-2016-performance-review/
That covers a pretty broad swath of funds. Bank loan funds, obviously. More generally, any floating junk (since the float keeps effective duration small). Also some other funds of interest: DBLTX +2.17%, JUCTX +3.92%, ZEOIX + 4.32%, DFLEX +5.48%, TGBAX +6.61%, BXIAX +14.59%.
Not exactly - MS and HY funds aren't necessarily short duration. Short junk like the two funds I mentioned is contained in the HY figures, along with other durations, but I tend to think of short junk as a separate category, similar to what M* and others do with IG funds of different durations.
But yes, the lower left box is loaded with fund options, which imho are good for diversifying a bond portfolio that's heavy on AGG-style vehicles.
P.S. Hadn't heard of that Barings fund before - looks like a good combo of corporates, loans, and asset-backed, if that's the usual breakout.