Best And Worst Of January: Nontraditional Bond Funds

Feb. 26, 2016 6:27 AM ETNTBAX, BTFAX, CPATX, DRSLX, PDINX, FXDAX
Brian Haskin profile picture
Brian Haskin
254 Followers

Nontraditional bond mutual funds and ETFs had a tough month in January, losing 1.13% on average. This extended the category's one-year losses through January 31 to -2.57%, consisting of -2.76% alpha and a -0.47 beta, relative to the Barclays US Aggregate Bond Total Return USD Index. Mutual funds and ETFs in the category averaged a -0.66 Sharpe ratio for the year ending January 31, with volatility of 3.53%.

The nontraditional bond fund category is a mixed bag of long/short credit funds, non-traditional income funds and unconstrained bond funds. In total, there are 150 funds (only 63 have a track record of 3 years or more) in the category and $129.3 billion of assets. Below is a look at the top and bottom performers for January.

Top Performers in January

The three best-performing nontraditional bond funds in January were:

  • Navigator Tactical Fixed Income Fund A (NTBAX)
  • BTS Tactical Fixed Income Fund A (BTFAX)
  • Counterpoint Tactical Income Fund A (CPATX)

NTBAX was the top-performing nontraditional bond fund in January, posting gains of 2.38%. This was enough to push the fund's one-year returns through January 31 into the black, at +0.34%. These returns consisted of 0.49% alpha and a 0.76 beta, yielding a Sharpe ratio of 0.09 with standard deviation (volatility) of 3.90%.

BTFAX ranked second for the month, with gains of 2.00%. Its one-year returns, however, remained in the red at -0.16%, with -0.02% alpha and a 0.65 beta. BFTAX's one-year Sharpe ratio stood at -0.04 through January 31, with annualized volatility of 4.15%.

Finally, CPATX was the month's third-best performing nontraditional bond fund in January, with gains of 1.31%. Its 12-month returns through January 31 stood at +2.10%, with 2.09% of alpha and a low 0.15 beta. CPTAX's Sharpe ratio of 0.60 was by far the best of any fund reviewed this month, and its 3.41% volatility was the lowest.

Bottom Performers in January

The three worst-performing nontraditional bond funds in January were:

  • Driehaus Select Credit Fund (DRSLX)
  • Putnam Diversified Income Trust A (PDINX)
  • Altegris Fixed Income Long Short Fund A (FXDAX)

FXDAX was January's worst-performing nontraditional bond fund, with its shares falling 5.17% for the month. Through January 31, FXDAX's one-year returns stood at -9.82%, consisting of -10.50% alpha and a -1.59 beta. This gave the fund a one-year Sharpe ratio of -1.60, with annualized volatility of 6.33%.

PDINX, the month's second-worst performer at -4.83%, also had bad-looking one-year numbers. Its losses of 5.47% were made up of -5.86% alpha and a -2.05 beta, yielding a -0.76 Sharpe ratio and 7.15% volatility.

Although it outperformed FXDAX and PDINX in January, DRSLX looked worst of all over the year ending January 31. In those 12 months, the fund lost 11.18%, with -11.97% alpha and a -1.55 beta. Its one-year Sharpe ratio stood at -1.70, and its annual volatility was 6.85%. Even over three- and five-year terms, DRSLX was down an annualized 4.58% and 1.66%, respectively.

Past performance does not necessarily predict future results.

Jason Seagraves contributed to this article.

Note: The MPT benchmark used for the above calculations was the Barclays US Aggregate Bond Total Return USD Index.

This article was written by

Brian Haskin profile picture
254 Followers
Investment industry professional since 1993 with experience in the U.S., Australia and Asia. Focused on understanding the markets on a global level and across asset classes.

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