Top 5 Bond Funds for Volatile Times


For more coverage from Ratings team, check out Ratings section. Ratings has sorted through the roughly 5,000 bond funds we rate and compiled a list of those that received the largest upgrades from us in the third quarter.

As would be expected, there was a clear flight to quality in the three months ended Sept. 30, with investors piling into short- to intermediate-term U.S. Treasuries.

The risk or volatility -- termed duration for bonds -- is lower at the short and intermediate end of the Treasury yield curve (i.e. those government bonds with roughly less than two years to maturity for short-term and two to five years for intermediate-term). Duration measures the interest rate sensitivity of the price of a bond to a 1% change interest rates. The shorter the term to maturity the lower the duration and less price sensitivity to any change in interest rates by the Federal Reserve.

However, in my view, duration can only be of relevance in a properly functioning market, and we do not have that right now. We have a fear-based market that has investors pulling out all stops to prevent capital destruction and they are doing this by running to U.S. government debt. It is a sign of the times that the funds that received the largest upgrades for the quarter returned pretty much 0% or slightly less for the three-month period.

Top 5 Bond Funds for Volatile Times
Fund Name
Current Grade
Previous Grade
3-Month Return
CNI Charter Government Bond N CGBAX B+ C+ 0.9 US Government - Short & Interm
Pioneer Protected Principal Plus A PPPAX C+ D+ 0 US Government - Short & Interm
Principal Govt & Hgh qlt A PRGVX C+ D+ -0.31 US Government - Short & Interm
RidgeWorth Strategic Income A SAINX C+ D+ -0.75 Corporate - High Yield
Schwab Short-Term Bond Market SWBDX C+ D+ -1.1 US Government - Short & Interm
Source: Ratings

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