Mutual Fund Spotlight: Loomis Sayles Bond Fund [LSBRX]
By: Ted Black, CFP©
Fall 2024 (Vol. 42, No. 3)
After a years-long battle to curb inflation that saw the Federal Reserve Board (the Fed) raise interest rates 11 times between March of 2022 and July of 2023, a shift in policy towards lowering rates has finally occurred. And though inflation remains above the Fed’s preferred 2% target, they apparently believe it’s on a sustainable path lower. As a result, at their September 2024 policy meeting, the Fed lowered the Federal Funds rate by 50 basis points (1/2 of 1%). The consensus now is that the Fed will continue on this path and lower rates again at their November meeting, with the market anticipating a 25 basis point (1/4 of 1%) cut.
Recall that there’s an inverse relationship between interest rates and bond prices. Rising interest rates put downward pressure on bond prices, and vice versa. For the most part, this is why bonds and bond funds have faced rough sledding over the past couple of years. Although the Fed’s decisions are always “data dependent”, and there are no guarantees rates will continue to fall, it does appear that this is the path we’re on. As it stands now the recent shift in interest rate policy is likely to be good news for bond prices.
The Loomis Sayles Bond fund (LSBRX) is a multi- sector bond fund launched nearly 30 years ago that has just north of $3.4 billion of assets under management. Multi-sector means that the fund managers can select their investments from different areas of the bond market. The fund may: invest up to 40% in foreign securities, including emerging market securities; invest up to 20% in non-US dollar denominated foreign securities; invest up to 35% in high yield securities; and may invest up to 20% in preferred and common stock.
The lead manager of this fund is Matthew J. Eagan, CFA. Mr. Eagan has been with Loomis Sayles since 1997 and is also a member of the firm’s Board of Directors. As of the funds latest report, roughly 73% of the fund’s assets are invested in U.S. bonds, with no other individual country representing a significant portion of the fund’s assets. Approximately 31% of the assets are invested in investment grade bonds, 13% +/- in High Yield bonds, 10% +/- in U.S Treasuries and 9% +/- in emerging markets bonds.
This fund pays interest on a monthly basis and currently has an annualized yield of 5.11%. With the attractive current yield and the potential for interest rates to fall consistently moving forward (potentially putting upward pressure on bond prices), this fund is worth consideration as an addition to one’s bond portion of their portfolio.
Performance annualized and updated through 10/31/2024:
1-Year: +15.56%; 3-Year: +0.51%; 5-Year: +1.69%
The gross annual expense ratio is 0.91%
If you’re interested in this fund, or would like a portfolio review to determine if this fund might be an appropriate addition to your portfolio, please call Ted Black, CFP© at 888-878-0001, extension 3.
Statistics and information provided by Morningstar and Value Line Funds. Please visit the Loomis Sayles Funds website at https:// www.loomissayles.com for the most recent performance information. The principal value and investment return will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns shown, unless otherwise indicated, are total returns, including any capital gains or losses and all dividend and capital gains distributions. The performance data quoted represents past performance and in no way guarantees future results. Mutual funds are not FDIC insured.
Mutual funds are sold by prospectus. An investor should consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus contains this and other information about the investment company. Please contact our office at 888-878-0001 to obtain a prospectus. Please read the prospectus carefully before you invest or send money.
Advisory services offered through Royal Palm Investment Advisors, Inc., a Registered Investment Advisor.