January’s market turmoil hit even the safest bond funds. Some of those that held up best strayed from their traditional investing grounds, or concentrated on the shortest maturities.
Only a few U.S.-based funds that focus on investment-grade taxable debt have earned a positive return or traded flat through January, when including interest payments and price swings, according to data compiled by
Direct. More than 300 others posted total losses ranging from minus 0.1% to minus 3.6% over the same period.
These bond funds, known on Wall Street as “core” and “core-plus” funds, typically hold some combination of relatively safe assets such as investment-grade corporate bonds, mortgage-backed securities and Treasurys. The pandemic’s bond rally helped power total returns on some core funds as high as 18% just two years ago.
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