This next article will feature one of the highest rated short term bond funds, Lord Abbett Short Duration Income fund. This mutual fund is rated the best short term bond fund by Morningstar and USNews. Details about this fund are described below.
Intro
There are several safe places to invest during volatile market period. One of these includes short term bond funds. Short term bond fund is a mutual fund which invests most of its assets in bonds with maturities of less than a few years (2-5 years). These bond funds usually invest in corporate bond with a duration ranging from 1 to 3.5 years.
This type of bond fund is usually very popular when stock market becomes volatile. There are several reasons why investor or trader should invest in these funds:
- It provide better place to hide during short term period during volatile market
- It provides higher yield than current interest rates or any typical saving account
- It is less sensitive to fluctuating interest rates
Lord Abbett Short Duration Income A (Ticker: LALDX)
The
Lord Abbett Short Duration Income fund objective is to provide a high level of income consistent with capital preservation. This Lord Abbett fund invests majority of net assets (>65%) in investment grade debt securities of various types. These securities may include short duration investment grade corporate debt securities (domestic and foreign in US denomination), U.S. Government securities, and mortgage- & other asset-backed securities. The fund may invest small part of net assets (<35%) in lower-rated debt securities (high yield or junk bonds), non-U.S. debt securities denominated in foreign currencies and floating or adjustable rate senior loans.
LALDX Fund Details
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| Lord Abbett Short Duration Income |
- Fund Inception Date: November 1993
- Ticker Symbol: LALDX (Class A)
- CUSIP: 543916100
- Beta (3yr): 0.58
- Rank in Category (YTD): 20
- Category: Short-Term Bond
- Type: Bond Fund
- Dividend Yield: 4.25%
- Load: 2.25%
- Dividend frequency: Monthly
- Capital Gains: If any, it will be distributed in December
- Numbers of Years Up: 15 years
- Numbers of Years Down: 2 years
- Average Coupon: 5.1%
- Effective Duration: 2.1 years
- Average Life: 3.1 years
- Number of holdings: 706
- Total Assets: $13.5 billion
updated on June 8th, 2011
Over the long period investment, this Lord Abbett Short Duration Income fund has been consistent performer with 15 positive years return and only 2 negative years return. This fund has experienced the worst 1-year total return in 2008 with -1.09% and best 1-year total return in 2009 with 16.96%. This fund has return 2.81% over the past year and 6.01% over the past 5-years. Morningstar has rated this bond fund with 5 stars rating.
This
short term bond fund has been managed by
Andrew H. O’Brien since January 1998. The fund annual expense is 0.60%. This fund does have 0.20% 12b1 fee and 2.25% front-end sales load fee. The fund current dividend yield is 4.25%.
The minimum initial investment needed to invest in the brokerage account in LALDX is $1,000 with no minimum subsequent investment. Should you be interested in IRA account, the initial investment is only $250. This LALDX can be purchased from 100 brokerages, include Ameriprise Brokerage, JP Morgan, Schwab RPS All, Raymond James, Royal Alliance, etc.
The other classes of this fund are:
- Class C: LDLAX
- Class F: LDLFX
- Class I: LLDYX
- Class R2: LDLQX
- Class R3: LDLRX
With the total net assets of this fund $13.5 billion, the fund are allocated as follows 31.1% CMBS, 27.1% investment grade corporate, 19.4% high-yield corporate, 10.6% ABS, 6.9% MBS, 2.3% sovereign, 1.0% government related, 1.0% cash, and 0.7% others. The top largest holdings of this fund as of April 2011 are DirecTV Holdings LLC, Teck Resources Ltd, General Electric Capital Corporation, TBA Federal National Mortgage, FHLMC Multifamily Structured, Anglo American Capital Plc, Mosaic Co, and Bank of America Corp.
Principal investment risks are interest rate risk, credit risk, high yield debts risk, liquidity risk, mortgage related risk, foreign company risk, foreign currencies risk, convertible securities risk, senior loan risk, derivative risk, portfolio management risk, etc.
Disclosure: No Position
Other Short Term Bond Funds:
The Delaware Diversified Income fund is seeking maximum long-term total return, consistent with reasonable risk. This Delaware Investments fund invests in these four sectors of the fixed-income securities markets: the U.S. investment grade bond, the U.S. high-yield bond, the international developed markets bond and the emerging markets debts. It invests most of net assets (>80%) in fixed-income securities. The fund may hold a substantial portion of assets in cash or short-term fixed-income obligations. It may also use a wide range of hedging instruments. The fund may invest up to 15% of assets in emerging markets.
