Nontraditional Bond Funds: The Best And Worst Of October
By DailyAlts Staff Nontraditional bond funds bounced back from September’s losses of 1.04% to post a 0.73% aggregate gain in October, according to Morningstar. In addition to the category swinging from losses to gains, the best-performing nontraditional bond funds posted bigger gains in October than September, and the worst-performing funds posted lighter losses. What follows is a recap of last month’s best and worst performers, concluding with a follow-up report on September’s standout funds. (click to enlarge) Top Performing Funds in October The PIMCO Floating Income Fund (MUTF: PFIIX ) was October’s top-performing nontraditional bond fund, gaining 3.19% for the month. In September, PFIIX was one of the category’s three worst performers, falling 2.80%. The fund’s rebounding performance was emblematic of the nontraditional bond category’s swing from loss to profit in October, but despite its solid gains for the month, PFIIX was still down 2.69% for the twelve months ending October 31. Over longer periods, its returns have been more attractive: The fund’s three- and five-year annualized returns of 1.34% and 2.25%, respectively, besting the category averages of 1.00% and 2.11%. PFIIX debuted in 2005 and has $657.4 million in assets under management (“AUM”). The second-best nontraditional bond fund to own in October was the WHV/ Acuity Tactical Credit Long/Short Fund (MUTF: WHAIX ), which returned +3.11% for the month. The fund launched on December 16, 2014, so it still didn’t have a one-year return as of October 31. For the first ten months of 2015, WHAIX boasted impressive gains of 8.01%, ranking at the very top of the category. Its AUM recently stood at $52.5 million. October’s third-best nontraditional bond fund – for the second month in a row – was the Robinson Tax Advantaged Income Fund (MUTF: ROBNX ), which added gains of 3.02% on top of the previous month’s 1.04%. The fund, which originally launched on September 30 of last year and has $64.1 million in AUM, returned +2.86% for the year ending October 31. (click to enlarge) Worst Performing Funds in October The Parametric Absolute Return Fund (MUTF: EOAIX ) was the worst-performing nontraditional bond fund in October, falling 3.45%. EOAIX, which launched in 2010, generated gains of 3.38% in the first ten months of 2015, but lost 4.20% for the three months ending October 31. The fund has $29.6 million in AUM. The Palmer Square Long/Short Credit (MUTF: PCHIX ) and the Legg Mason Alternative Credit (MUTF: LMANX ) funds were the category’s next-worst performers in October, posting respective losses of 2.45% and 1.85%. Of the two, PCHIX is the smaller and younger fund, with $20.6 million in AUM and a November 2014 launch date, compared to LMANX’s $789.5 million AUM and August 2010 debut. PCHIX’s losses have also been steeper over the three- and ten-month periods ending October 31, at 4.73% and 7.28%, respectively; compared to LMANX’s lighter losses of 3.77% and 5.21%. (click to enlarge) September’s Best and Worst: Follow-Up As previously stated, September’s third-best and third-worst nontraditional bond funds found their way into October’s top three – but what happened to the #1 and 2 best- and worst-performers from the prior month? The best nontraditional bond funds in September were the Cedar Ridge Unconstrained Credit Fund (MUTF: CRUMX ) and the Forward Credit Analysis Long/Short Fund (MUTF: FLSIX ), both of which returned +1.07%. In October, CRUMX posted gains but underperformed at +0.58% compared to the category average of +0.74%. FLSIX outperformed, gaining 0.94% for the month. The Highland Opportunistic Credit Fund (MUTF: HNRAX ) was September’s worst performer by a longshot, falling 7.2%. The month’s next-worst fund, the Fortress Long/Short Credit Fund (MUTF: LPLIX ), posted comparatively lighter losses of 3.17%. In October, HNRAX was able to eke out a 0.07% gain – still well under the category average – while LPLIX outperformed with an impressive gain of 1.29%.