Close Close

Portfolio > Mutual Funds > Bond Funds

Taking the Middle Way

Your article was successfully shared with the contacts you provided.

As the Federal Reserve commits to raising interest rates, the environment for bonds will likely become bleak after nearly a half decade of low rates and strong gains.

Still, intermediate bonds (i.e., fixed-income securities that typically mature between three and ten years) have delivered generally good returns, as their sensitivity to interest rate risks is between short- and long-term bonds.

One of the best performers amongst intermediate bond funds, the $414.5-million Delaware Corporate Bond Fund (DGCIX), typically invests in corporate bonds rated BBB and above by Standard & Poor’s.

As of October 31, portfolio manager Ryan K. Brist kept an average credit quality of A, (with BBB-rated securities accounting for the largest portion of assets, at 34.1%), an average effective maturity of 9.7 years, an average coupon of 6.17%, and an average effective duration of 5.8 years.

The portfolio is highly diversified by sector. Financials represent the largest slice (25.13%), followed by smaller allocations in eight other industries. The portfolio comprises a total of 354 securities issued by companies located in 20 countries.

Another consistently strong long-term performer, the $3.72-billion Calvert Income Fund (CINCX), seeks relative value to earn incremental income. Portfolio managers Gregory Habeeb and Matt Nottingham perform in-depth credit analysis to identify bonds with attractive price-appreciation potential, and specialize in uncovering issues with complex and unusual structures.

The fund typically keeps at least 65% of net assets in investment-grade debt securities, with the remaining 35% in non-investment grade issues. As of September 30, the fund had an average credit quality of AA- (with AAA-rated securities representing 29% of assets), an average effective maturity of 8.68 years, and an average duration of 3.94 years.

Habeeb attributed the fund’s recent outperformance to maintaining a short-duration, high-quality bias.–Palash R. Ghosh


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.