In the March 18 issue of Barron's, Baird Funds President Mary Ellen Stanek discussed her approach to investing in the bond market, which focuses on adding basis points of yield and return through old-fashioned credit analysis.
While she has a strong opinion on interest rates, Stanek doesn't bet on their direction. Instead, she specializes in what she calls microsurgery: adding basis points of yield and return here and there, by doing old-fashioned credit analysis and choosing securities and sectors.
Says Warren Pierson, Stanek's colleague and No. 2 in setting Baird's bond strategy, "Her greatest strengths include her attention to and capacity for details, along with an inherent curiosity; microsurgery in a market where many focus on macrosurgery." As the Federal Reserve raised interest rates for only the third time since the financial crisis, we asked Stanek what lies ahead.
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The yields cited in the article are regarded as supplemental to the funds' SEC 30 day yield. The institutional funds' SEC 30 day yields as of February 28, 2017 were 1.63%, 2.77% and 2.52% for the Short-Term Bond Fund, Core Plus Bond Fund and Aggregate Bond Fund, respectively. SEC 30 day yields current to the most recent month end may be obtained here.
The reference to the Core Plus Bond Fund being a "top-ranked" fund is a reference to Baird Advisors being named a finalist for the Morningstar 2016 Fixed Income Fund Manager of the Year Award for its management of the Baird Core Plus Bond Fund (BCOIX).
Past performance is not indicative of future results and diversification does not ensure a profit or protect against a loss. All investments carry some level of risk, including loss of principal. An investment cannot be made directly in an index. Fixed income is generally considered to be a more conservative investment than stocks, but bonds and other fixed income investments still carry a variety of risk such as interest rate risk, credit risk, inflation risk and liquidity risk. In a rising interest rate environment, the value of fixed-income securities generally decline and conversely, in a falling interest rate environment, the value of fixed income securities generally increase. High yield securities may be subject to heightened market, interest rate or credit risk and should not be purchased solely because of the stated yield.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained here and should be read carefully before investing.