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 Top Diversified Bond Funds

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Posts : 625
Join date : 2009-06-25
Age : 31
Location : New York City

PostSubject: Top Diversified Bond Funds   Thu Nov 12, 2009 12:18 pm

LoL the first thing i thought of was "Wu Tang Financials" ... ain't nothing to F with! haha

Content Provided by

Best of Funds

Top Diversified Bond Funds

By: Swarup Gupta

November 12, 2009 | Comments: 0

Recommended this article (1)


Today we are featuring top-performing "Diversified Bond"
fixed-income mutual funds , which primarily invest in a variety of
bonds that pursue total return as well as income.
Investors can find such funds by checking out the entire list of the Zacks #1 Rank Diversified Bond Fixed-Income Funds.
3 Solid Choices
Franklin Strategic Income A (FRSTX) was incepted in
May 1994 and seeks a high level of current income with capital
appreciation over the long term as a secondary objective.
The fund invests at least 65% of its assets in U.S. and foreign debt
securities. The fund may invest up to 100% of its total assets in bonds
that are rated below investment grade. The fund generally invests in
bonds rated at least Caa by Moody's Investors Service or CCC by
Standard & Poor's Ratings, or in unrated bonds that the fund's
manager determines are comparable.
The fund has an expense ratio of 0.89%. It offers dividends monthly and capital gains, if any annually.
Christopher J. Molumphy has been lead manager of the fund since May
1994. Molumphy is a Chartered Financial Analyst and executive vice
president and director at Franklin Templeton Investments.
MainStay Diversified Income A (MASAX) seeks to
provide current income and competitive overall return by investing
primarily in domestic and foreign debt securities. It was incepted in
February 1997.
The fund primarily focuses on U.S. government and domestic
investment grade securities, high-yield corporate bonds and
international debt securities. It seeks to combine high quality, higher
return potential and broad diversification by country, currency,
industry and type of security.
Shareholders have to make a minimum initial investment of $25,000 to
enter this Zacks#1 Rank (“Strong Buy”) fund. The fund offers dividends
monthly and capital gains in December.
Dan Roberts has been lead manager of the fund since October 2009.
Prior to his current assignment, Roberts was chief investment officer
and an equity shareholder at Pareto Partners.
PL Managed Bond A (PPBAX) seeks to maximize total
return consistent with prudent investment management. It typically
invests in investment-grade bonds of varying maturities.
The fund invests at least 80% of its assets in fixed income
securities with varying terms to maturity. The fund may invest up to
10% of its assets in lower-rated, high-yield bonds, 20% in foreign
investments denominated in foreign currencies and beyond limit in U.S.
dollar denominated securities of foreign issuers.
The fund distributes dividends quarterly and capital gains annually. As of June 2009, its portfolio turnover was 441%.
William H Gross has been lead manager of the fund since February 29,
2008. Gross is a designated Chartered Financial Analyst. He has also
been recognized as an influential authority on the US bond market in a
survey by Pensions and Investments Magazine conducted in 1993.
Discover Many More Funds
Learn more about the new Zacks Mutual Fund Rank and discover some of
the best market-beating mutual funds by browsing our new mutual funds
section. This part of offers a variety of tools, including
mutual fund research, a new mutual fund screener, helpful answers to
frequently asked questions and quick access to prospectuses and other
By applying the Zacks Rank to mutual funds, investors can find funds
that not only outpaced the market in the past but are also expected to
outperform going forward.
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PostSubject: Re: Top Diversified Bond Funds   Tue Jan 12, 2010 11:37 am

Corporate Bond Returns Rising Fastest Since '98: Credit Markets

By Bryan Keogh

Jan. 12 (Bloomberg) -- Corporate bonds are providing the
best returns in more than a decade, spurring sales by PepsiCo
Inc. and Bayerische Motoren Werke AG as investors anticipate
that earnings growth will make it easier for companies to meet
debt payments.
The Bank of America Merrill Lynch Global Broad Market
Corporate Index returned 1.02 percent since Dec. 31, the biggest
gain for the start of a year since rising 1.51 percent in the
same period of 1998. Financial and energy companies are the top
performers, with issues by New York-based American International
Group Inc. rallying 3.62 percent, and oil refiners rising 2.18
percent, the index shows.
Amid no signs that last year’s record rally will end soon,
combined profits of companies in the Standard & Poor’s 500 Index
likely rose 62 percent last quarter, according to more than 7,400
analysts’ estimates compiled by Bloomberg. Some $95 billion has
been raised in the global corporate bond market in 2010,
compared with $101 billion in the same period of 2009, Bloomberg
data show.
“We’re telling our clients get into the markets now, get
some of your financing done now, don’t leave it all for later in
the year because it could be more difficult to finance by the
middle of the year or later in the year,” said Mark Bamford,
the head of global fixed-income syndicate at Barclays Capital
Inc. in New York. Barclays is the biggest underwriter of U.S.
debt this year, according to data compiled by Bloomberg.
Elsewhere in credit markets, interest-rate swap spreads
narrowed for a third day as Treasuries gained and investors
added to bets the Federal Reserve will keep its target rate for
overnight loans between banks at a record low through at least
mid-2010. Indonesia is preparing to raise about $2 billion of
10-year bonds, after scrapping plans to also issue 30-year debt.
Mortgages, Swaps
Corporate bonds rallied 16.3 percent on average in 2009,
after losing 4.73 percent in 2008 as credit markets froze,
according to the Merrill Lynch index, which tracks almost 8,500
The extra yield investors demand to own the debt instead of
Treasuries has fallen 15 basis points, or 0.15 percentage point,
this year to 161 basis points. Last year, the spread narrowed
313 basis points. Corporate yields closed yesterday at 4.17
percent in New York, compared with last year’s high of 7.41
percent on March 17.
PepsiCo, the second-largest soft-drink maker, sold $4.25
billion of securities yesterday to finance its acquisition of
two bottlers, split between 18-month, 5-year, 10-year and 30-
year bonds.
Higher Rates
The Purchase, New York-based company’s five-year notes were
priced to yield 57 basis points more than Treasuries, compared
with a spread of 180 basis points on securities of the same
maturity debt sold in February. The older bonds last traded Jan.
5 at 103.95 cents on the dollar, up from 99.788 cents when they
were issued.
“Coming to market now versus later is a good move,
because everyone is anticipating that by the end of this year,
rates will be higher,” said Stephen Mahoney, a money manager at
Glenmede Trust Co. in Philadelphia, who oversees $4 billion in
fixed-income assets that includes PepsiCo bonds. The company’s
outstanding bonds are trading “very rich,” signaling the time
was right for PepsiCo to issue, he said.
Investors added a record $153.2 billion to U.S. bond funds
in 2009 as the economy began to recover from the first global
recession since World War II, according to EPFR Global, a
research firm in Cambridge, Massachusetts. John Lipsky, the
first deputy managing director at the International Monetary
Fund, said in a Bloomberg Radio interview on Jan. 6 that the
agency may raise its 3.1 percent forecast for global growth.
‘Strong Liquidity’
“Asset managers need to invest a lot of money from pension
funds, insurance companies and banks, so bond spreads are
tightening,” said Santiago Rubio, who helps oversee about 14
billion euros ($20 billion) as head of investment funds at La
Caixa’s asset-management unit in Madrid. “The strong liquidity
on the buy-side will be matched by a no-less-strong volume of
new issuance, so the spread tightening may stop.”
Bamford said sales in the U.S. may decline about 10 percent
this year from the 2009 record.
“The number, though, will vary based on the number of
mergers and acquisitions,” Bamford said. “If there are far
more mergers and acquisitions, we would expect to see far more
corporate issuance.”
Nasdaq Borrowing
Nasdaq OMX Group Inc., the second-biggest U.S. equity
exchange operator, said it will borrow almost $2 billion in
bonds and loans. Bank of America and JPMorgan Chase & Co. are
arranging two term loans of $500 million each and a $250 million
revolving credit line, Nasdaq said yesterday in a regulatory
filing. The New York-based company said it also plans $700
million of senior notes due 2015 and 2020.
Proceeds will be used to repay the $1.7 billion Nasdaq owed
in term loans as of Dec. 31 and to refinance a $75 million
revolver with no outstanding debt, according to the filing. The
transaction will extend Nasdaq’s maturities and provide it with
looser debt terms, it said.
Munich-based BMW, the largest maker of luxury cars, issued
2.5 billion euros ($3.6 billion) yesterday in the biggest bond
sale in Europe by a non-financial company in almost three
months, Bloomberg data show.
The offering was split between 1 billion euros of notes due
April 2013 that pay interest at 68 basis points more than the
benchmark mid-swap rate and 1.5 billion euros of notes due
January 2017 with a spread of 90 basis points.
Indonesia Bonds
Indonesia’s 10-year bonds may be priced to yield about 6
percent, or 2.2 percentage points more than similar-maturity
U.S. Treasuries, according to people familiar with the sale. A
sale of 30-year bonds was canceled. The debt would have yielded
about 7.25 percent, or 2.54 percentage point more than
Treasuries, according to the people.
European governments are preparing to expand their funding
sources. Spain hired banks to sell bonds as it starts raising a
budgeted 211.5 billion euros this year. Austria is issuing at
least 3 billion euros of seven-year notes, according to the
country’s Federal Financing Agency.
The rate at which companies defaulted on their debt fell
for the first time in two years in the fourth quarter, Moody’s
Investors Service said yesterday. The global speculative-grade
default rate dropped to 12.5 percent, from 12.6 percent in the
previous three months, Moody’s said in a report.
S&P raised the ratings on 184 U.S. borrowers last quarter
and cut 181, the first time upgrades exceeded downgrades since
the three months ended June 30, 2007, Bloomberg data show.
Swap Spreads
Rising confidence can be seen in U.S. interest-rate swap
spreads. The difference between the rate to exchange floating-
for fixed-interest payments and Treasury yields for two years,
known as the two-year swap spread, narrowed as much as 0.94
basis point to 26.25 basis points. That’s down from last month’s
intraday high of 39.75 on Dec. 8.
Swap spreads are based in part on expectations for the
London interbank offered rate, or Libor, and are used as a gauge
of investor perceptions of credit risk. Swap rates serve as
benchmarks for investors in many types of debt, including
mortgage-backed and auto-loan securities.
The most-senior mortgage securities backed by option
adjustable-rate mortgages jumped 9 cents on the dollar from mid-
December to 58 cents at the end of last week, according to
Barclays. That’s almost double the low of 33 cents in March.
So-called non-agency home-loan bonds have been “leading
the pack,” Barclays analysts led by Ajay Rajadhyaksha in New
York wrote in a Jan. 8 report. Investors, who in December were
trying to protect their 2009 gains and boost their year-end cash
to show shareholders, regulators and clients, are now buying,
according to Scott Buchta, head of investment strategy at
Guggenheim Securities LLC in Chicago.
‘Demand for Assets’
“It’s cash that was on the sidelines at the end of the
year coming in,” Buchta said. “You’re seeing huge demand for
Yield spreads on the most-senior 10-year commercial-
mortgage securities originally rated AAA narrowed 0.26
percentage point last week to 3.99 percentage points, according
to Morgan Stanley data. Spreads have contracted from 4.88
percentage points in the week ended Dec. 11 and a record 14.26
percentage points in November 2008.
In Australia, overseas borrowers are selling the most
local-currency notes in almost three years to exploit the
record-low cost of swapping the proceeds for U.S. dollars.
Australian Banks
So-called kangaroo bond sales jumped to A$9 billion ($8.4
billion) last quarter from A$5.3 billion in the three months
ended Sept. 30, according to data compiled by Bloomberg. The
sales were the highest since A$11.4 billion was raised in the
first three months of 2007. So far this year, kangaroo bonds
totaled A$1.75 billion.
Financial institutions are benefitting as Australian banks
increase overseas borrowing before a change in capital reserves
regulations triggered by the global credit freeze. A sevenfold
increase in U.S. dollar bond sales after the rules were proposed
drove the cost of exchanging debt in greenbacks for Australian
dollars to the highest on record, the five-year basis swap
shows, meaning kangaroo bond sellers performing the opposite
transaction are getting the biggest-ever discount.
Borrowers typically use cross-currency basis swaps to
exchange floating-rate payments in one currency to another. The
Australian dollar basis swap measures the cost of switching
interest charges pegged to the Libor for rates linked to
Australia’s bank bill swap rate.
The basis swap rose to 48 basis points on Dec. 2, the
highest since 1997 when Bloomberg records began, and was last at
41 basis points after averaging 16 basis points in the first
nine months of 2009.

Corporate bonds have been extremely attractive as many fortune 500 companies are looking to refinance bank debt. The spreads between Treasuries and AAA debt have been historic. Its too bad I missed this one.
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PostSubject: Re: Top Diversified Bond Funds   Tue Jan 12, 2010 11:52 am

Barclays Favors Selling Nakheel Bonds After 75% Surge (Update2)

By Haris Anwar

Jan. 12 (Bloomberg) -- Investors should sell Nakheel PJSC’s
bonds after they rose as much as 75 percent from record lows as
parent Dubai World is likely to offer bondholders recovery
values below current levels, Barclays Capital said.
Nakheel’s 3.6 billion-dirham ($980 million) floating-rate
note due in May rose to 71 cents on the dollar yesterday,
gaining 58 percent from the Dec. 7 low, Bloomberg data showed.
Nakheel’s 2.75 percent bond due January 2011 traded at 63 cents
on the dollar. Prices for the note have gained 75 percent since
Dec. 9.
“The final recovery value for Nakheel is likely to be
negotiated at 40 percent to 50 percent,” London-based analysts
including Alia Moubayed and Milena Ianeva wrote in a report
released yesterday. “We would therefore be sellers of Nakheel
2010 and 2011 paper at current levels.”
The Dubai government said on Nov. 25 that state-run holding
company Dubai World is seeking a “standstill” accord on its
debt and that of its Nakheel unit. Dubai World on Dec. 1 said it
seeking to restructure $26 billion debt. Dubai that month
avoided a default on $4.1 billion payments due for Nakheel’s
2009 bond after Abu Dhabi provided a lifeline of $10 billion.
Recovery Rate
BNP Paribas SA and EFG-Hermes Holding SAE analysts said
last month the company may repay bondholders as much as 70 cents
on the dollar and issue new securities to restructure the
remainder of the debt. Nakheel said today the next “periodic
distribution” of $10.3 million for its $750 million Islamic
bond maturing next year is due on Jan. 19.
“Bondholders know that the recovery rate on Nakheel’s
remaining bonds is not going to be zero,” said Abdul Kadir
Hussain, chief executive officer of fund manager Mashreq Capital
DIFC Ltd. “They understand that there is a possibility that
these securities are going to be restructured and they are
trading them and valuing them as such.”
Nakheel’s note due in May traded at 72 cents on the dollar
today, according to prices provided by National Bank of Abu
Dhabi PJSC. The developer’s bond due next year traded at 64
cents on the dollar, according to NBAD.
Dubai, the second-biggest of seven states that make up the
United Arab Emirates, and its state-owned companies borrowed at
least $80 billion until 2008 to transform the emirate into a
tourism and financial hub. The seizure of debt markets after the
onset of the global credit crisis led to a 50 percent decline in
property prices in the city and hampered the ability of Dubai-
based companies to raise new loans to refinance maturing debt,
which amounts to more than $30 billion over the next two years,
according to Barclays estimates in the note.
No Blank Cheque
“De facto support from Abu Dhabi is currently the only
available option for Dubai,” Barclays analysts wrote, citing
their meetings with Abu Dhabi officials. “The message from Abu
Dhabi was clear: the $10 billion support package for Dubai World
is not a blank cheque.”
Abu Dhabi is the largest of the seven emirates that formed
the U.A.E. in 1971 and holds more than 90 percent of its oil
reserves, the world’s sixth largest. Dubai has traditionally
guarded its autonomy, maintaining a separate army until 1996 and
keeping full control of economic affairs. The $10 billion
bailout in the form of a bond in December followed a similar $10
billion bond sale in February to the nation’s central bank based
in Abu Dhabi and a $5 billion debt sale by two Abu Dhabi-owned
commercial banks on Nov. 25.
‘Serious Setback’
The most important demand from Abu Dhabi, according to
Barclays, is “reaching a standstill agreement with creditors
before April 2010 and identifying the potential sources of
revenues that can be tapped to repay the debt, including
possible sales” of assets.
Investors last year lost money on Nakheel’s $3.52 billion
bond that plunged more than 50 percent after Dubai World
initially signaled it doesn’t plan to repay the bondholders.
Dubai paid the bond on Dec. 14 after the Abu Dhabi cash
“The last few weeks of 2009 created a serious setback in
the Dubai credit story,” Barclays said. “In the short term,
the offshore capital markets effectively remain closed to many
Dubai entities, and long-lasting effects will render access more
Barclays recommended buying bonds issued by Jebel Ali Free
Zone FZE, an industrial park owned by Dubai World as the company
should be able to service its debt load without the need for
restructuring. It also favors bonds issued by the port operator
DP World Ltd.
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