Best Bond Funds #5: Metropolitan West Low Duration Fund (MWLDX)
Click to Enlarge If the threat of rising interest rates still has you nervous or you are just looking for some additional return on excess cash lying around, you may want to consider the Metropolitan West Low Duration Bond Fund (MWLDX). The objective of this fund is to maximize current income consistent with capital preservation.
MWLDX has a reasonable expense ratio of 0.57% and pays a current 30-day SEC yield of 1.1%. The portfolio is made up primarily of investment grade securities in mortgage, corporate, and government bonds. The average duration of the portfolio is just 1.21 years which means that you are getting a mix of bonds that are going to be less sensitive to swings in interest rates.
While you sacrifice some yield and capital appreciation potential, at least you know that a slice of your portfolio is generating income without taking too much risk. In 2013, MWLDX had a total return of 1.93% and is rated 4 stars by Morningstar.
David Fabian is Managing Partner and Chief Operations Officer of FMD Capital Management. As of this writing, he was long PONDX and DBLTX in his personal accounts, and FMD Capital Management holds OSTIX for clients. Learn More: Why I love ETFs, And You Should Too.