This Core Bond Fund Is on Our Radar
Brian Moriarty: One fund that has been on our radar is Frost Total Return Bond, ticker FATRX. The fund currently falls into the short-term bond category because the manager has kept duration short in recent years, but it should also be compared to the intermediate-term category because it is designed to form the core of a bond portfolio.
Over the trailing five years, its 3.4% annualized return has easily beaten the 2.1% return of the Bloomberg Barclays Aggregate Bond Index. It also outperformed more than 90% of peers in both the short-term and intermediate-term categories over the same period. It has managed that performance despite not holding a lot of corporate bonds, which have been one of the best-performing sectors in recent years. Rather, it has roughly 50% in securitized sectors, such as mortgages, CLOs, ABS, and CMBS. It is also barbelled, with roughly 30% in bonds rated triple B and below, offset by another 30% in cash and Treasuries.
The team is relatively small and fees are average, but this is still a fund worth keeping an eye on.