Thursday May 17, 2012
by Mark Salzinger, editor The No-Load Fund InvestorWhat funds offer bear market protection? We currently include several intermediate-term, medium-quality U.S. bond funds in our Best Buys list.
Besides holding portfolios comprising different types of U.S. bonds, these funds have one thing in common: portfolio managers with excellent records.
While it would be virtually impossible for even the best equity portfolio manager to guide his fund to profit during a big bear market, an active bond fund manager who successfully rides the bond currents can add more diversification value than a static allocation would suggest.
And, unlike Treasuries, gold and even cash, bond funds with superior managers have the potential to combine bear-market protection with meaningful levels of income and decent performance over time.
Janus Flexible Bond (
JAFIX) and
PIMCO Total Return (
PTTDX), both of which we include in many Best Buys models, marry total returns of more than 8% from October 2007 through February 2009 with 10- year annualized returns of about 6.7% and yields of more than 3.5%.
Managers of other funds that performed well during the big bear market include Jeffrey Gundlach and Phillip Barach, who led
TCWTotal Return (TGMNX) to positive returns (also for the longer run) before leaving TCWand founding DoubleLine Capital.
That suggests that their current charges—
DoubleLine Core Fixed Income (
DLFNX) and
DoubleLine Total Return Bond (
DLTNX) —are also likely to satisfy investors over the long haul, as well as during bear markets for equities.
Learn more about this financial newsletter at Mark Salzinger's The No-Load Fund Investor.Related articles:
