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Mutual Fund Spotlight: Western Asset Core Bond Fund [WATFX]

By: Ted Black, CFP©
Spring 2020 (Vol. 38, No. 1)

In previous articles, I’ve reviewed the topic of asset allocation … the process of determining how much of one’s portfolio might be allocated to Stocks, Bonds and Cash Equivalents. By analyzing one’s risk tolerance and investment time horizon and subsequently building an investment portfolio with an appropriate mix of assets, an investor can greatly diminish the reliance on predicting short-term movements, and sow the seeds for long-term investment success.

As recent market activity has made very clear, the financial markets can be extremely volatile and unpredictable. And with the rise of algorithmic based computer trading, which is reported to make up roughly 70% of all stock trading in the U.S. markets, the speed in which markets move in either direction is perhaps unlike any other time in history. Relying on one’s ability to predict the short-term direction of the market is very tricky business, and can lead to disastrous results.

Although each investor has to set their own path, in most cases, a certain percentage of one’s portfolio is likely to be allocated to high quality Bonds. The Western Asset Core Bond Fund is an intermediate term bond fund that seeks to maximize total return from a high-quality, U.S. dollar denominated core fixed-income (bond) portfolio. Western Asset Management is one of the world’s leading fixed income managers. With a focus on long-term fundamental value investing that employs a top-down and bottom-up approach, the firm has nine offices around the globe and deep experience across the range of fixed income sectors. Founded in 1971, Western Asset has been recognized for an approach emphasizing team management and intensive proprietary research, supported by robust risk management.

Bonds are very different animals than Stocks, and will almost certainly never match the long term performance of Stocks. However, they can provide an element of stability to one’s portfolio which can help an investor stay the course during periods when Stocks are performing poorly.

As of March 31, 2020, this fund has an annual yield of 2.73%, and pays a dividend on a monthly basis. Dividends can be reinvested in the fund, or paid out in cash to be allocated to another portion of one’s portfolio. Over 71% of the portfolio is invested in bonds rated AAA, with the remainder of the portfolio invested in what is considered “investment grade” bond holdings.

If you’d like to discuss this further, or would like a portfolio review to determine if this fund might be appropriate for your portfolio, please call Ted Black, CFP® at 888-878-0001, extension 3.

Performance annualized and updated through 04/30/2020: 1-Year: +8.76%; 3-Year: +5.07%; 5-Year: +4.17%. The gross annual expense ratio is 0.45%.

Statistics and information provided by Morningstar and Western Asset. Please visit the Western Asset website at 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 n o 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 go to or 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.