Best performing bond funds of 2022 | morning star | Jobs Vox


In one of the worst years in history for bond funds, there were few refuges for investors.

Only four Morningstar Medalist funds achieved positive results in 2022.

The cause of double-digit losses in many bond funds is the Federal Reserve’s interest rate hike. As a result, the funds least exposed to rate hikes have proven to be the most buoyant: the ultrashort bond fund.

Because ultrashort bonds have very short maturities, they are less sensitive to changes in interest rates, and the average ultrashort bond fund is down 0.2% through 2022. The performance of these funds may seem underwhelming, but these returns compare to a 12 percent decline. Average US Intermediate Core Bond Fund.

In three and five years, the performance charts paint a very different picture. In the year Even with a loss in 2022, the best-performing bond funds are primarily high-yield bond funds with more risk. High-yield bonds are less sensitive to interest rates and their performance is tied to the stock market.

Best performing bond mutual funds and etfs line chart in 2022

Best performing funds for 2022

Ultrashort bond funds have little interest rate risk, but they took more conservative bets that helped them outperform in 2022 when interest rates rise. A key metric for them is duration, a measure of years that assesses a bond’s interest-rate sensitivity. It is often associated with the maturity of imprisonment.

Fidelity Conservative Income Bond ( FCNVX ) was the best performer of all the Morningstar Medal winners this year, gaining 1.1% through December 19. The fund has performed less than its conventional counterpart, writes Morningstar analyst Saraja Samant. “This helped it outperform sales in the first half of 2022,” she wrote.

Table of 2022 Best Performance Medal winning US bond funds

3-year best performing bond fund

A dismal year for bonds marred long-term records for most bond funds. But strong gains in high-yield bond funds following the March 2020 crash have offset recent losses for long-term investors.

Over the past three years, Fidelity Capital & Income (FAGIX) has done the best. The bronze-rated fund has gained 3.62 percent annually over the past three years. After losing 29.3% due to the Covid-19 selloff, the fund has gained 33.7% over the past nine months of 2020, writes senior manager research analyst Sam Coolahan. In a volatile first seven months of 2022, with rising prices and riskier assets stumbling, timely stock drawdowns and a relatively cautious stance on high yields helped the strategy limit the period’s decline to 8.6%, in line with the category. normal”

In the year Inflation-protected bond funds have posted mixed results as inflation rises through 2022, but Vanguard Short-Term Inflation-Protected Securities (VTSPX) is one of the best. The fund has gained 2.5% this year, while the average inflation-protected bond fund has fallen 8.9%. The fund’s short-term portfolio has “prevented interest rates from rising,” wrote associate managing research analyst Moat Almahasneh.

The best US bond mutual funds and etfs

5-year best performing bond fund

Over the past five years, Brandywine Global High Yield (BGHSX) has produced the best returns of all medallion taxable bond funds. The fund has increased by 5.2% annually over the past five years.

“The strategy’s shift to a more conservative stance helped it outperform most rivals through the year to August 2022, as rising interest rates and Russia’s invasion of Ukraine rattled markets,” wrote managing director research analyst RJ D’Ancona. The fund offers the highest yield among Medalist bond funds.

PGIM Short High Yield Income (HYSQX) adjusted for higher yields with lower interest rate sensitivity, helping the fund when interest rates rise. The fund has lost just 4.7% this year and is up 3.6% each year over the past five years.

Table of best bond mutual funds and etfs

December 22, 2022: An earlier version of this article included an incorrect symbol for BrandywineGlobal High Tield (BGHSX).


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