Harbor Bond Fund (HABDX)

Continuing with the Kiplinger 25 Best Fund of 2011 theme, the following is the next bond mutual fund for investor to invest in long term portfolio. Depending on your conform level, you can adjust the asset / portfolio level accordingly. This next fund is all about Harbor Bond Fund (Ticker: HABDX). Kiplinger typically updated its best fund list every year. This Harbor fund is also listed in the previous Kip 25 list. Harbor Bond fund is classified as intermediate term bond fund.

Harbor Bond Fund (Ticker: HABDX)

The Harbor Bond Fund is advised by Pacific Investment Management Company LLC (PIMCO). PIMCO is known as the largest bond fund operator in US and world with its PIMCO Total Return Bond fund. The Harbor Bond fund invests primarily in corporate and government-issued fixed income securities or debts. These debts can be located in the U.S. and foreign countries (up to 30%), including emerging markets or developing countries (up to 15%).

Intermediate Term Bond Fund

This Harbor Bond fund may invest >15% of total assets in below investment-grade (junk rated) domestic and foreign securities. The fund invests in intermediate term bonds with an overall portfolio rated high quality investment grade bonds.

This Harbor Bond fund is essentially very similar to PIMCO Total Return Bond fund, the world's biggest mutual fund. Both funds were run by Bill Gross since 1987. Bill Gross has been known as the bond guru for awhile and has shown an uncanny ability to consistently beat his benchmark. Harbor fund has sub-advised this fund for PIMCO to manage. The total net asset is $7.24 billion. The fund also has a yield of 3.05% per year. The annual expense ratio of this fund (0.55%) is lower than the average (0.94%).

HABDX fund details

• Fund Inception Date: December 1987
• Ticker Symbol: HABDX
• CUSIP: 411511108
• Beta (3yr): 0.91
• Rank in category (YTD): 49
• Category: Intermediate-Term Bond
• Yield: 2.55%
• Net Assets: $2.3 billion
• Expense Ratio: 0.51%
• Sales Load: 0% 
• Capital Gains: N/A
• Number of Years Up: 21 years 
• Number of Years Down: 2 years
• Average Duration: 3.55 years
• Average Maturity: 4.15 years
• Average Market Coupon: 3.06%
• Fund Manager: Mark R. Kiesel, Scott A. Mather, and Mihir P. Worah

updated on May 2017

For brokerage account and IRA account, investor will need $1,000 initial investment fund to start investing in this fund. This HABDX fund can be purchased from 78 brokerages like E*TRADE Financial, Pershing FundCenter, TD Ameritrade Institutional, Firstrade, etc. If you have a retirement account (401k or IRA), please check with your account administrator for details. The other class of this fund is Administrative Class (Ticker: HRBDX).

For the fund performance, this intermediate term bond mutual fund has returned 6.66% over the past year and 7.35% over the past 3 years. For long term performance, the fund has returned 7.50% over the past 5 years and 6.89% over the past decade. The fund has its best return in 2009 with 13.84% return and the worst return in 1999 with -0.32% return. This best rated bond fund has the highest Morningstar rating with 5 stars. The fund annual turnover rate is 675% which is considered high.

The performance of this fund is as below:

• Year 2017: 2.33% (YTD)
• Year 2016: 3.24%
• Year 2015: 0.23%
• Year 2014: 4.78%
• Year 2013: 1.46%

As of January 2011, this Harbor Bond fund has 1083 number of bonds. The yield to maturity is 4.46% and the average coupon is 3.3%. The weighted average maturity is 7.17 years and the weighted average duration is 5.38 years. Some of the top 10 fund issuers are Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corp (FHLM), Wells Fargo & Co, Arkle Master Issuer plc, Citigroup Capital, and ING Bank NV MTN. This top 10 represent 23.4% of total holdings.

This fund’s top 10 sectors allocation as of March 2011 are 32.2% in Mortgage Pass-Through, 30% in Corporate Bonds and Notes, 5.0% in Foreign Government Obligations, 4.6% in Collateralized Mortgage Obligations, 3.3% in Municipal Bonds, 1.8% in U.S. Government Agencies, 1.4% in U.S. Government Obligations, 1.4% in Asset-Backed Securities, 0.5% in Convertible Bonds, 0.3% in Bank Loan Obligations and 0.2% in Preferred Stocks.

Investment risk

Investing in this fund involve risk such as interest rate risk, credit risk, prepayment risk, selection risk, derivative risk, foreign securities risk, short sales risk, mortgage risk, and high yield risk. Please check the fund prospectus for details about the investment risk. You can also invest in its administrative class with HRBDX fund ticker. This fund may need higher initial investment of $50,000. The fund also only charges a very low expense ratio of 0.80% per year.

Disclosure: No Position Other Bond Funds article:

• Loomis Sayles Bond Fund LSBRX
• Vanguard Short-Term Investment Grade VFSTX
• PIMCO Investment Grade Corporate Bond A PBDAX

Morningstar analysts has ranked this Harbor Bond fund with gold rating. It also has a yield of 2.15%. The total net assets are $7.5 billion. Its effective duration is 6.63 years. The top 3 sectors are agency MBS pass-through (14.3%), corporate bond (13.82%), and agency MBS CMO (12.4%).

Harbor Bond Fund (HABDX) was part of Kiplinger's Best Mutual Funds, KIP 25 before.

This fund is managed by Mark R. Kiesel, Scott A. Mather, and Mihir P. Worah since 2014.