Best Bond Funds #4: Osterweis Strategic Income Fund (OSTIX)
Click to Enlarge Managed by the boutique investment management firm Osterweis Capital Management, the Osterweis Strategic Income Fund’s (OSTIX) strategy seeks to provide capital preservation in concert with long-term total return. The fund currently has $6 billion in assets under management as of the end of January.
The fund typically invests in short-duration high-yield bonds, as well as convertible bonds, to achieve its objectives. However, the strategy carries the flexibility to allocate anywhere in the fixed-income universe. This type of flexibility presents a great value proposition since it isn’t forced to hold longer-duration Treasury and agency MBS holdings that make up the Barclays U.S. Aggregate Index.
It is a “risk-aware” strategy, meaning it will adapt to changes in interest rates, or move to cash in an attempt to shield its investors from an unfavorable investment outcome. This is precisely what OSTIX did for investors in 2013 with a total return of 6.58% and very low overall volatility. It should be noted that this strategy pays quarterly dividends and has a current 30-day SEC yield of 3.04%.