| Loomis Sayles Investment Grade Bond Fund takes a flexible approach
Portfolio Manager Dan Fuss explains how Loomis Sayles Investment Grade Bond Fund may fit into an investor’s portfolio.
What approach do you take to
managing the fund?
The fund focuses on investment-grade
bonds and complements them with a flexible,
multisector approach. Investment-grade
bonds are those that are rated BBB or higher
by Standard & Poor’s or Baa or higher by
Moody’s. Companies that fall into these categories
have been identified by these rating
agencies as less likely to default, or not pay
back their bondholders.
What is the multisector approach
that you refer to?
Multisector refers to our ability to also invest
in different types of bonds. We have the
flexibility to invest up to 10% of the fund’s
assets in below-investment-grade issues. We
also can seek out value in the bond markets
of other countries.
What is the potential benefit
of adding below-investmentgrade
or foreign bonds to the
fund’s portfolio?
Lower-quality bonds pay higher interest
rates because investors expect to be compensated
for the extra risk they assume
when buying these bonds. So the fund’s
limited exposure to these bonds can potentially
have a positive impact on the fund’s
performance without increasing the overall
risk of the fund too much. Foreign bonds
may be paying higher interest rates than
U.S. bonds, so we also look for opportunities
to boost returns by investing outside of
the U.S. bond market.
How do you seek out the best
opportunities for the fund?
I work with a fixed-income team at
Loomis Sayles that includes 21 analysts who
average 16 years’ experience, and I have
been in the investment business for more
than 45 years. We’ve all weathered some
of the most difficult bond market cycles
and have learned how to look for value. We
think one of the most important steps is to
complete our own in-depth research before
deciding which securities to buy or sell. We
don’t rely only on what the rating agencies
or the companies themselves are telling
us; we dig much deeper to find out if they
make sense for the fund’s portfolio.
What investors should know
about the fund
While they can potentially enhance returns,
lower-rated fixed-income securities are also
considered riskier than investment-grade
securities because there is a greater rate of
default among the issuers of such securities.
This fund may invest in foreign and emerging
market securities, which have special risks not
associated with domestic securities, such as
currency fluctuations, differing political and
economic conditions, and different accounting
standards. Mutual funds that invest in
bonds can lose their value as interest rates
rise, and an investor can lose principal.
Read more about the Loomis Sayles Investment Grade Bond Fund.
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