First, we select the top trending category from more than 200 categories listed on MutualFunds.com based on the percentage increase in monthly viewership. Then, we choose the top three funds with the highest one-year trailing total returns from the top trending category. To ensure funds’ quality and staying power, we only look at those mutual funds with a minimum of $100 million in assets and a track record of at least three years. We also remove those mutual funds closed to new investors and unavailable for investment outside registered accounts such as retirement or 529.
In this edition, we look closely at trending Bond Sector Diversified Funds for investors.
Sector-diversified bond funds go beyond typical aggregate bond funds to invest in diverse corners of the fixed-income markets. For example, many of these funds focus on residential mortgage-backed securities or collateralized debt obligations. These securities may provide a safe haven in markets where conventional bonds may be underperforming.
Be sure to check out the Bond Sector Diversified Funds page to find out more about the other funds in this category as well.
The T. Rowe Price Dynamic Global Bond Fund (RPIEX) takes first place with a 3.33% trailing 12-month total return. With its 0.70% expense ratio and 2.37% yield, it’s the lowest cost but lowest yield fund on the list.
The fund seeks to generate positive returns from global fixed income with a focus on downside risk and providing diversification from equity markets. These securities may include high-yield and emerging market debt that may reduce liquidity and increase certain credit risks. The portfolio may also use derivatives to achieve its goals.
The fund’s portfolio holds 142 securities, including 21.58% U.S. Treasuries, 10.35% German Bunds, and 9.3% UK and Northern Ireland bonds. While the portfolio has exposure to 30 countries, North America accounts for about 38.31% of the portfolio. In aggregate, the portfolio has a duration of 0.48 years and an average maturity of about 4.91 years.
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2. Regan Total Return Income Investor Fund (RCTRX)
The Regan Total Return Income Investor Fund (RCTRX) comes in second place with a -0.12% trailing 12-month total return. With its 1.61% expense ratio and 8.5% yield, the fund stands in the middle of the road when it comes to cost but offers the highest yield of the bunch.
The fund seeks high current income and capital appreciation while minimizing duration and credit risk by actively managing a portfolio of high-quality, senior non-agency bonds. The fund manages their investments through mutual funds, separate accounts, and private investment partnerships to maximize outcomes.
The fund’s portfolio holds about 80% of its net assets in non-agency mortgage-backed securities and 20% of its assets in agency mortgage-backed securities and other fixed-income securities. For instance, the portfolio may hold some commercial MBS, asset-backed securities, senior CLOs, or other fixed-income investments.
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3. Catalyst Enhanced Income Strategy Fund (EIXAX)
The Catalyst Enhanced Income Strategy Fund (EIXAX) comes in third place with a -3.18% trailing 12-month total return. With a 1.75% expense ratio and a 6.4% yield, the fund has the highest cost of the group and offers a middle-of-the-road yield.
The fund seeks to generate current income via investments in often-overlooked segments of non-agency residential mortgage-backed securities and other fixed-income asset-backed securities. In addition to its focus on these areas, the fund offers monthly distributions that may be attractive for retirees and others looking for regular income.
The portfolio consists of 71.88% residential mortgage-backed securities, including 61.66% legacy RMBS and 9.45% agency derivatives. The remainder of the portfolio is divided into commercial mortgage-backed securities (22.85%), asset-backed securities (1.01%), and cash (4.26%).
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The Bottom Line
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