In the midst of record redemptions from the Pimco Total Return Fund following the surprise exit of its legendary manager Bill Gross, advisors may be exploring alternative selections for clients' fixed income allocations.
Gross' departure from the firm he co-founded in 1971, for a much smaller fund at Janus Capital, prompted a record $446.5 million in withdrawals on Sept. 26. The following Monday Morningstar downgraded the bond fund's rating from gold to bronze. Overall, Pimco reported net outflows of $23.5 billion in September.
As investors flee, what are their options? "If you are looking for a substitute the next logical step would be to look at the intermediate bond funds that are gold-rated," says Morningstar analyst Josh Charney, who adds that only about 3% of total funds receive such a rating. "That could be a really good starting point."
With many advisors reevaluating their bond fund investments, here are the four intermediate-term bond funds that also carry a gold rating from Morningstar.
Metropolitan West Total Return Bond Fund (MWTRX)
YTD Return: 4.65%
3-year return: 5.64%
Total assets: $34.2 billion
YTD Flows: $7.3 billion
Dodge & Cox Income Fund (DODIX)
YTD Return: 4.86%
3-year return: 4.90%
Total assets: $29.4 billion
YTD Flows: $3.4 billion
Fidelity Total Bond Fund (FTBFX)
YTD Return: 4.67%
3-year return: 3.97%
Total assets: $16.1 billion
YTD Flows: $3 billion
Loomis Sayles Investment Grade Bond A (LIGRX)
YTD Return: 4.54%
3-year return: 6.31%
Total assets: $10.4 billion
YTD Flows: $254 million
All data from Morningstar as of Oct. 2.
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access