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The Best Bond Fund Manager You've Never Heard Of

Hiyield007Hiyield007
edited October 2012 in Fund Discussions
http://www.businessweek.com/news/2012-10-02/the-best-bond-fund-manager-youve-never-heard-of#p1

I have been aware of this fund for some time now. I've always had an itch to buy but never could figure out exactly where his big returns were coming from - maybe bank bonds I figured. After reading this article I've lost my itch. However, his new defensive bond posture could well be borne out. Januaries are when trends in markets often change so will be watching closely what occurs in some of this years's better performing areas of Bondland.

Comments

  • fundalarmfundalarm
    thanks for posting.. yeah, now is not good time to invest in them -- with 30% in cash, after realizing most of the profits, waiting for the next big thing..
  • BondInvestor
    With only $40 million in assets, they should have no problem finding relative value opportunities. The fact that 30% of fund is in cash suggests to me that these guys are purely asset allocation specialists and nothing looks good to them right now

    I read the article in businessweek . .comparing their returns to PIMCO Total Return is a huge mistake. These guys are taking on much more credit risk. I would really put them in the high-yield category. If you compare their returns to high-yield funds, the performance does not look so special.
  • Hiyield007Hiyield007
    Reply to @BondInvestor: I apologize for nitpicking but compared to high yield funds very special. Per Morningstar, SUBFX beats the average high yield fund by 8.22% YTD and beats by 7.55% one year.

    fundalarm, they apparently don't think the next great thing is non-agency mortgage backed securities like some managers we know. PONDX keeps rocking further and further into overbought territory. I mean it hasn't even had a 1% decline from any high YTD as it makes new high after new high.
  • Hiyield007Hiyield007
    Up .25% today. Obviously those bank bonds have some juice. Depending how tomorrow's employment report shakes out will take a small plunge in SUBFX. A weak report would probably be good going forward for the likes of non agency mortgage backed (PONDX, ANGIX, TGLMX)) as their continued buying is dependent on the employment number not getting too hot too fast over the ensuing months/year.
  • BobCBobC
    Impressive short-term record, for sure. They have really loaded up on financial sector bonds, and clearly they will stretch for total return. Investors need to consider these things when deciding on whether to invest in the fund. Have the big gains already been achieved with the bonds they own? How much more capital appreciation can the managers squeeze out of them? The fund has a very high STD which could be problematic. Scout is a good shop, though. We would probably sidestep this fund in favor of a less high-octane option, like OSTIX.
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