About 53% of active bond managers beat ETFs in 2023, up from 30% in 2022 according to Morningstar.
Overall, actively managed mutual funds and exchange-traded funds (ETFs) lagged passive funds, with 47% of active strategies beating ETFs, according to Morningstar. However, actively managed funds performed better in the bond category.
About 53% of active bond managers beat ETFs in 2023, compared to 30% in 2022, the research firm said.
core bond funds invest primarily in investment-grade debt securities, ranging from government to corporate issues. Active managers in this category tend to take on more credit risk through the corporate bond market or mortgage-backed securities than index funds — and that helped them perform better last year, said Paul Olmsted, senior analyst at management research at Morningstar.
core bond funds have also withstood recessions, thanks to their diversification across fixed income and duration. Duration measures the sensitivity of a bond’s price to changes in rates, and longer-dated bonds tend to have a higher duration - they change more with interest rate changes, especially as they get closer to maturity.
Olmsted believes in actively managing bonds for the long term.
Here are some actively managed bond funds that rank in the top quartile for total return so far this year, according to Morningstar:
1) Baird Intermediate Bond Fund
2) Fidelity Intermediate Bond Fund
3) TIAA-CREF Core Impact Bond Fund
An active bond fund will cost you more than a passive one, and higher expenses can erode returns.
Consider that the passively managed benchmarks in the medium-term bond fund category are the Vanguard Total Bond Market ETF (BND) and the iShares Core U.S. Aggregate Bond ETF (AGG). Both are cheap, with expense ratios of 0.03%, and both have year-to-date total returns of about -1.4%, according to Morningstar.
Meanwhile, the Fidelity Intermediate Bond Fund (FTHRX), which is actively managed, has an expense ratio of 0.45%. However, it holds up better than its passive peers, with a year-to-date total return of -0.4%, according to Morningstar.
That said, do your due diligence and make sure the fund’s high fees aren’t reducing your returns. Olmstead says paying between 50 and 75 basis points is a reasonable fee for an actively managed fund.
|DISCLAIMER
The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader retains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to public savings.| Original article published on Money.it Italy 2024-04-18 07:07:00. Original title: 5 fondi obbligazioni da comprare ora
