Thoughts and Bonds: The Beginning of the End
Our Fundamental Fixed Income team provides insights on potential investment risks and opportunities, and shares our global outlook for the quarter ahead.
(
JFLEX
)
Flexible Bond Fund
30 Years of Fundamental Fixed Income Investing
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Overview
Client Commitment
This dynamic core bond fund leverages a bottom-up, fundamentally driven investment process designed to generate risk-adjusted outperformance and capital preservation. Throughout its 30 year history, the Fund has utilized an active and flexible approach to manage across a variety of market and rate cycles.
Why Invest in the Fund
- By emphasizing risk-adjusted returns and capital preservation, the fund can serve as a foundation for a fixed income portfolio. The strategy uses a bottom-up, fundamentally driven investment process that seeks to identify the best opportunities across fixed income sectors, including up to 35% high-yield.
- Partnership and fluid communication between fixed income and equity analysts promote idea generation. Credit research emphasizes free cash flow generation, quality of management and security valuation.
- Our proprietary fixed income portfolio and risk-management system, Quantum Global, is integrated into the investment process at each step. We identify and measure the sources of risk in the portfolio at multiple levels to confirm that the portfolio is positioned as intended.
Dynamic Core Bond Holding
Integrated Research
Sophisticated Risk Management
Portfolio Management
Featured Insights
Performance
RETURNS
| Inception: Jul 07, 1987 | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inception |
|---|---|---|---|---|---|---|---|
| Flexible Bond Fund – I Shares | 2.61% | 8.97% | 9.49% | 2.91% | 3.05% | 4.30% | 6.51% |
| Bloomberg Barclays U.S. Aggregate Bond Index | 2.27% | 8.52% | 10.30% | 2.92% | 3.38% | 3.75% | 6.27% |
| Inception: Jul 07, 1987 | 3M | YTD | 1YR | 3YR | 5YR | 10YR | Since Inception |
|---|---|---|---|---|---|---|---|
| Flexible Bond Fund – I Shares | 2.61% | 8.97% | 9.49% | 2.91% | 3.05% | 4.30% | 6.51% |
| Bloomberg Barclays U.S. Aggregate Bond Index | 2.27% | 8.52% | 10.30% | 2.92% | 3.38% | 3.75% | 6.27% |
Returns quoted are past performance and do not guarantee future results; current performance may be lower or higher. Investment returns and principal value will vary; there may be a gain or loss when shares are sold.
View Fees and Expenses
Performance for Class I Shares that includes periods prior to 7/6/09 reflects the performance of one or more share classes of the Fund or a predecessor fund, adjusted, where applicable and permitted, for differing fees and expenses. See the Fund’s prospectus for further details concerning historical performance.
View Fees and Expenses
Performance for Class I Shares that includes periods prior to 7/6/09 reflects the performance of one or more share classes of the Fund or a predecessor fund, adjusted, where applicable and permitted, for differing fees and expenses. See the Fund’s prospectus for further details concerning historical performance.
CALENDAR YEAR PERFORMANCE
RETURNS-BASED STATISTICS
(As of 08/31/19 CLASS I SHARES)
RISK / REWARD
|
3 YEAR | 5 YEAR |
|---|---|---|
| Information Ratio | -0.05 | -0.55 |
| Alpha | 0.30 | -0.01 |
| Tracking Error | 0.73 | 0.73 |
| Beta | 0.89 | 0.88 |
| R-Squared (%) | 95.69 | 94.90 |
UP AND DOWN MARKET CAPTURE (%)
|
3 YEAR | 5 YEAR |
|---|---|---|
| Up Capture Ratio | 91.93 | 87.97 |
| Down Capture Ratio | 85.00 | 88.42 |
STANDARD DEVIATION |
3 YEAR | 5 YEAR |
|---|---|---|
| Flexible Bond Fund | 3.02 | 2.80 |
| Bloomberg Barclays U.S. Aggregate Bond Index | 3.32 | 3.09 |
SHARPE RATIO |
3 YEAR | 5 YEAR |
|---|---|---|
| Flexible Bond Fund | 0.52 | 0.72 |
| Bloomberg Barclays U.S. Aggregate Bond Index | 0.49 | 0.79 |
ANNUAL FEES & EXPENSES(As of Fiscal Year End, 06/30/18) |
CLASS I SHARES |
|---|---|
| Management Fees | 0.40% |
| 12b-1 Fees | - |
| Other Expenses | 0.10% |
| Total Gross Expenses | 0.50% |
| Waivers | 0.00% |
| Total Net Expenses | 0.50% |
Net expense ratios reflect the expense waiver, if any, contractually agreed to through 11/1/19.
Characteristics
Index represents the Bloomberg Barclays U.S. Aggregate Bond Index.
TOP HOLDINGS(As of 08/31/2019) |
% of Fund |
|---|---|
| United States Treasury Note/Bond, 2.38%, 02/29/24 | 2.85 |
| United States Treasury Note/Bond, 2.00%, 05/31/24 | 2.40 |
| United States Treasury Note/Bond, 2.62%, 02/15/29 | 1.69 |
| United States Treasury Note/Bond, 2.12%, 05/31/21 | 1.25 |
| Ginnie Mae, 4.50%, 09/19/19 | 1.19 |
| United States Treasury Note/Bond, 3.00%, 02/15/48 | 1.06 |
| United States Treasury Note/Bond, 2.38%, 05/15/29 | 1.04 |
| Fannie Mae or Freddie Mac, 4.00%, 09/12/19 | 1.01 |
| United States Treasury Note/Bond, 3.00%, 02/15/49 | 1.00 |
| United States Treasury Note/Bond, 2.88%, 05/15/49 | 0.98 |
| TOTAL | 14.47 |
PORTFOLIO CHARACTERISTICS(As of 08/31/19) |
FUND | INDEX |
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DEVELOPED VS. EMERGING MARKET(As of 08/31/19) |
% OF FUND | % OF INDEX |
|---|---|---|
| U.S. | 97.82 | 91.75 |
| Non-U.S. Developed | 1.86 | 5.28 |
| Cash & Equivalents | 0.32 | - |
CREDIT QUALITY OF FIXED INCOME HOLDINGS(As of 08/31/19) |
% OF FUND | % OF INDEX |
|---|---|---|
| Aaa | 46.41 | 72.13 |
| Aa | 0.95 | 3.40 |
| A | 6.92 | 10.77 |
| Baa | 34.64 | 13.69 |
| Ba | 8.51 | 0.01 |
| B | 2.25 | - |
Bond credit quality ratings provided by Barclays and reflect the middle rating received from Moody's, Standard & Poor's and Fitch, where all three agencies have provided a rating. If only two agencies rate a security, the lowest rating is used. If only one agency rates a security, that rating is used. Ratings are measured on a scale that ranges from Aaa (highest) to D (lowest).
SECTOR ALLOCATION(As of 08/31/19) |
% OF FUND | % OF INDEX |
|---|---|---|
| Credit-Investment Grade | 38.56 | 25.03 |
| MBS | 26.92 | 26.81 |
| Treasuries | 16.67 | 39.91 |
| Credit-High Yield | 9.80 | 0.01 |
| CMO | 3.65 | - |
| ABS | 2.94 | 0.45 |
| CMBS | 1.14 | 2.00 |
| Cash & Equivalents | 0.32 | - |
MATURITY BREAKDOWN OF FIXED INCOME HOLDINGS(As of 08/31/19) |
% OF FUND | % OF INDEX |
|---|---|---|
| < 1 yr | 2.13 | 0.89 |
| 1 - 3 yrs | 9.94 | 20.47 |
| 3 - 5 yrs | 29.40 | 14.72 |
| 5 - 7 yrs | 17.58 | 10.27 |
| 7 - 10 yrs | 22.52 | 9.92 |
| 10 - 20 yrs | 3.62 | 7.82 |
| > 20 yrs | 14.03 | 35.91 |
| N/A | 0.46 | - |
REGIONAL ALLOCATION(As of 08/31/19) |
% OF FUND | % OF INDEX |
|---|---|---|
| North America | 98.25 | 92.92 |
| Europe | 1.43 | 3.29 |
| Cash & Equivalents | 0.32 | - |
Commentary & Literature
2Q19 Portfolio Commentary Highlights
- As the Fed’s pivot to a more accommodative stance evolved into potential rate cuts in 2019, both Treasuries and corporate credit performed well in the second quarter.
- The Fund captured a significant portion of the period’s upside, but ultimately underperformed its benchmark.
- Macro uncertainties, including slower global growth and trade tensions, will likely lead to more accommodative monetary policy from the Fed and other developed world central banks.