People on the move: Feb. 26

DeAndre Lipscomb_headshot.jpg

Lender and servicer Homepoint, based in Ann Arbor, Mich. announced the creation of a new executive leadership role. As the company’s first chief officer of diversity and inclusion, DeAndre Lipscomb will be tasked with developing initiatives that support the company’s corporate social responsibility goals.
Lipscomb most recently served as executive director of the Lake Trust Foundation and as community impact manager for Lake Trust Credit Union. Previous to that, he held executive leadership roles within the healthcare industry, fostering employee engagement, community outreach and enhanced diversity and inclusion strategies in the sector.
“I am impressed by the leadership team’s demonstrated commitment to embedding diversity and inclusion into the company culture,” Lipscomb said in the announcement. “I look forward to working with the team to strengthen communities through financial well-being brought by homeownership and education.”


PennyMac posts strong profits in Q4 despite MSR losses

PennyMac, the nation’s largest mortgage aggregator, posted net profits of $452.8 million in the fourth quarter of 2020.

In all, the nonbank brought in $1 billion in revenue during the fourth quarter of 2020, its latest earnings report showed.

The gains were driven by “core production and servicing results partially offset by fair value losses on mortgage servicing rights (MSRs) and associated hedging and other losses,” the firm said in a statement to investors.

PennyMac’s pretax income for originations checked in at $572.6 million, down 7% from the third quarter, but up 182% over the same period in 2019. Direct lending interest rate lock commitments (IRLCs) came in at a record $18.6 billion in unpaid balance – nearly $13 billion of which came through the consumer direct channel, and about $5.7 billion in the broker channel.

“PennyMac Financial delivered another strong quarter, with book value per share increasing 15% on record production levels,” President and CEO David Spector said in a statement. “PFSI’s third-quarter momentum carried into the fourth quarter with net income near record levels and producing a return on equity of 56% for the quarter. Our direct lending channels showed incredible growth with consumer direct and broker direct originations growing 27% and 29%, respectively.”

Total loan acquisitions and originations during the fourth quarter came in at a record $69.4 billion in unpaid balance, up 28% from the prior quarter and 64% from the fourth quarter of 2019. Correspondent acquisitions of conventional loans fulfilled by its mortgage investment trust were $38.0 billion in UPB, up 39% from the prior quarter and 85% from the fourth quarter of 2019.

PennyMac’s servicing portfolio grew to $427 million, up 6% from the prior quarter and 16% from the same period a year prior. The record production volume offset higher-than-usual prepayments.

Company executives on the earnings call on Thursday spoke of the challenges with managing the servicing portfolio.

PennyMac “successfully protected our asset values as our disciplined hedging and risk management strategy largely offset the $1 billion write-down on the fair value of the MSR,” Spector said in a statement. “Additionally, we granted approximately 291,000 homeowners forbearance plans in 2020 and have helped, or are in the process of helping, approximately 145,000 borrowers successfully emerge from their forbearance plans.”

The correspondent lender and servicer has been using its profits in recent quarters to buy back shares of its stock. It repurchased about $89 million worth of stock during the fourth quarter, and its corporate board approved another repurchase of between $500 million and $1 billion. During 2020, it repurchased about $337 million worth of stock.

PennyMac posted $2.2 billion in net income in total for 2020, with revenue at $3.7 billion.


The 25 Best Low-Fee Mutual Funds You Can Buy

The Kiplinger 25 list of our favorite no-load mutual funds dates back to 2004, and our coverage of mutual funds goes all the way back to the 1950s. We believe in holding funds rather than trading them, so we focus on promising mutual funds with solid long-term records – and managers with tenures to match.

Over the past 12 months, U.S. stocks hit new highs, and then a viral pandemic snuffed out a nearly 11-year bull market, wiping out gains in just days … and then stocks bounced back into a new bull market just a few months later. The major indices have been roaring ever since, and have been regularly setting all-time highs of late.

That has many (but not all) of our Kiplinger 25 picks looking like their old selves.

Over the past decade, for instance, the 11 U.S. diversified stock funds with 10-year records returned an average of 13.4% annualized, right on par with the S&P 500 Index. Our seven bond funds as a group beat the Bloomberg Barclays U.S. Aggregate Bond Index over the past five and 10 years on an annualized-return basis.

Here are our picks for the best 25 low-fee mutual funds: what makes them tick, and what kind of returns they’ve delivered.

Data is as of Jan. 28, unless otherwise noted. Three-, five- and 10-year returns are annualized. Yields on equity funds represent the trailing 12-month yield. Yields on balanced and bond funds are SEC yields, which reflect the interest earned after deducting fund expenses for the most recent 30-day period.
– Fund not in existence for the entire period.

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Dodge & Cox Stock

Composite image representing Dodge & Cox's DODGX fundComposite image representing Dodge & Cox's DODGX fund
  • Symbol: DODGX
  • 1-year return: 10.1%
  • 3-year return: 4.9%
  • 5-year return: 14.7%
  • 10-year return: 11.5%
  • Yield: 1.7%
  • Expense ratio: 0.52%

The focus: Cheap shares in large firms.

The process: Ten managers home in on well-established companies with attractive prices and long-term prospects. Portfolio managers are patient and invest with a three- to five-year horizon in mind.

The track record: The fund is prone to streaky returns because the managers’ out-of-favor bets can take time to play out. Be patient. Over the past 10 years, the fund’s 11.5% annualized return beats 95% of its peers, which are funds that invest in bargain-priced large-company stocks. But, like many value-oriented funds, it lags Standard & Poor’s 500-stock index, which boasts a 13.5% annual total return (price plus dividends).

The upshot: Markets are cyclical, and this investing style will come back.

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Mairs & Power Growth

  • Symbol: MPGFX
  • 1-year return: 17.4%
  • 3-year return: 11.0%
  • 5-year return: 15.6%
  • 10-year return: 12.9%
  • Yield: 1.0%
  • Expense ratio: 0.65%

The focus: Upper Midwest firms of all sizes with durable competitive advantages, trading at bargain prices.

The process: Three managers spend months analyzing a company’s niche in its market and its management team before they buy. The fund tilts toward health care and industrial firms. While MPGFX does hold some tech and communications giants, such as Microsoft (MSFT), Google parent Alphabet (GOOGL) and chipmaker Nvidia (NVDA), the fund’s top 10 holdings aren’t as heavy on tech names as many large-cap U.S. stock funds.

The track record: The fund “struggles in strong markets and picks up ground in downturns,” says lead manager Andy Adams. Growth’s 15-year annualized return beats 70% of similar funds. But over the past 12 months, it beats about half.

The upshot: The pandemic may have roiled stocks last year, but the managers will “stick to their knitting,” says Adams.

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Primecap Odyssey Growth

  • Symbol: POGRX
  • 1-year return: 25.6%
  • 3-year return: 10.6%
  • 5-year return: 19.4%
  • 10-year return: 15.0%
  • Yield: 0.4%
  • Expense ratio: 0.65%

The focus: Long-term bets on attractively priced, fast-growing firms.

The process: Five managers run a portion of assets independently. They all look for companies with better growth prospects than their share prices imply. And they buy for the long term: The typical holding period is 10 years.

The track record: This aggressive growth fund’s one-year return ranks behind 94% of its peers, in part because of big drops in Alkermes (ALKS) and Southwest Airlines (LUV). Smart investors will hold on. The fund’s 15-year record beats the S&P 500 by an average of 1.6 percentage points per year.

The upshot: These proven managers know how to block out the noise. We’re hanging in.

4 of 25

T. Rowe Price Blue Chip Growth

Composite image representing T. Rowe Price's TRBCX fundComposite image representing T. Rowe Price's TRBCX fund
  • Symbol: TRBCX
  • 1-year return: 30.5%
  • 3-year return: 17.1%
  • 5-year return: 22.5%
  • 10-year return: 17.6%
  • Yield: 0.0%
  • Expense ratio: 0.69%

The focus: Established companies with strong growth prospects.

The process: Manager Larry Puglia favors firms with sustainable competitive advantages over rivals, strong cash flow, healthy balance sheets and executives who spend in smart ways. The company’s top holding is (AMZN, 11.3% of assets), which has been one of the darlings of the COVID-period market, up 76% in 2020 versus 18% for the S&P 500. In April, Puglia took on an associate manager, Paul Greene, but says he has no plans to retire.

The track record: Puglia beats the S&P 500 index handily over the past three, five and 10 years – and, despite the recent market volatility, over the past 12 months as well.

The upshot: Blue Chip Growth was a prime beneficiary of the long bull market, but the fund has held up well since the market crashed. And over the long stretch of a full market cycle, Puglia has outpaced the S&P 500.

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T. Rowe Price Dividend Growth

  • Symbol: PRDGX
  • 1-year return: 11.3%
  • 3-year return: 11.3%
  • 5-year return: 15.8%
  • 10-year return: 13.1%
  • Yield: 1.0%
  • Expense ratio: 0.63%

The focus: Firms with a mindset to increase dividend payouts over time.

The process: Manager Tom Huber focuses on large, high-quality companies that generate strong free cash flow (cash profits after capital expenditures) and have the capacity and willingness to raise their payouts.

The track record: PRDGX lags the S&P 500 by more than 6 percentage points over the past year. But its 15-year annualized return slightly edges out the S&P 500 and beats 86% of its peers (funds that invest in stocks with value and growth traits).

The upshot: T. Rowe Price Dividend Growth, an all-weather portfolio, keeps pace in good markets and holds up well in down markets.

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Vanguard Equity-Income

Composite image representing Vanguard's VEIPX fundComposite image representing Vanguard's VEIPX fund
  • Symbol: VEIPX
  • 1-year return: 3.5%
  • 3-year return: 4.5%
  • 5-year return: 11.9%
  • 10-year return: 11.3%
  • Yield: 2.6%
  • Expense ratio: 0.27%

The focus: Dividend-paying stocks.

The process: Wellington Management’s Michael Reckmeyer runs two-thirds of the assets; Vanguard’s in-house quantitative stock-picking group manages the rest. Together, they build a portfolio of about 180 large companies, including Johnson & Johnson (JNJ), Procter & Gamble (PG) and JPMorgan Chase (JPM).

The track record: Health care stocks were a boon to the fund in 2019, but it has struggled over the past year, with a mere 3.5% gain. Nonetheless, over the past decade, VEIPX has beaten 93% of its peers (funds focused on large, value-priced firms). 

The upshot: The fund offers above-average returns for below-average risk.

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DF Dent Midcap Growth

  • Symbol: DFDMX
  • 1-year return: 21.4%
  • 3-year return: 18.0%
  • 5-year return: 21.6%
  • 10-year return:
  • Yield: 0.0%
  • Expense ratio: 0.98%

The focus: Growing midsize companies.

The process: Four managers find solid businesses that dominate their industries, generate plenty of cash and are run by executives who spend wisely. The fund will hold on to shares as long as a firm is still growing fast. Shares in large-cap stock Ecolab (ECL) have been in the fund since 2011.

The track record: DFDMX has beaten the majority of its peers in seven of the past nine calendar years.

The upshot: Mid-cap stocks are often in the market’s sweet spot. Typically, these firms are growing faster than large companies and are less volatile than small businesses.

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Parnassus Mid Cap

  • Symbol: PARMX
  • 1-year return: 12.4%
  • 3-year return: 9.6%
  • 5-year return: 14.6%
  • 10-year return: 11.9%
  • Yield: 0.2%
  • Expense ratio: 0.99%

The focus: Growing midsize firms that pass environmental, social and governance (ESG) measures.

The process: Two longtime managers, 18 analysts and a dedicated ESG team pick 40 stocks, with sustainability in mind. Hologic (HOLX), a diagnostics and medical imaging company, and Republic Services (RSG), a waste-collection service, are among the top holdings.

The track record: PARMX’s one-year return has beaten 68% of its peers. Over 10 years, the fund’s 12.0% annualized return beat 87% of its peers.

The upshot: At the moment, technology is the largest sector allocation at more than a quarter of assets. The fund is also heavily invested in industrials (21%) and healthcare (14%).

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T. Rowe Price Small-Cap Value

  • Symbol: PRSVX
  • 1-year return: 15.5%
  • 3-year return: 7.5%
  • 5-year return: 15.3%
  • 10-year return: 10.8%
  • Yield: 0.4%
  • Expense ratio: 0.83%

The focus: Unloved, under-the-radar, bargain-priced small companies.

The process: Financially sound firms with a competitive edge over rivals and a strong management team make it into the fund. PennyMac Financial Services (PFSI), a national mortgage lender, and Belden (BDC), a maker of networking and cable products, are among PRSVX’s top holdings.

The track record: Small-cap value stocks have been the worst-performing U.S. category in recent years. But this fund is only a little behind the Russell 2000 index over the trailing five-year period.

The upshot: Small-cap stocks have gained some wind in their sails of late, but they still have some catching up to do compared to their large-cap brethren. PRSVX provides exposure to the some of the best values among smaller companies.

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T. Rowe Price QM U.S. Small-Cap Growth

  • Symbol: PRDSX
  • 1-year return: 24.0%
  • 3-year return: 13.2%
  • 5-year return: 19.0%
  • 10-year return: 14.5%
  • Yield: 0.0%
  • Expense ratio: 0.79%

The focus: Small, growing companies.

The process: Using quantitative models (hence the “QM” in its name) developed initially while he was in academia, Sudhir Nanda and his team focus their sights on high-quality, highly profitable firms with reasonably priced shares. Samuel Adams beer crafter Boston Beer (SAM) and semiconductor-materials provider Entegris (ENTG) are among top holdings.

The track record: The fund has handily beaten the Russell 2000 small-cap stock index over the past three, five and 10 years.

The upshot: Since the end of 2019, shares in small companies are up less than 7%. But Nanda focuses more on an individual company’s business characteristics than on big-picture market or economic issues.

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Wasatch Small Cap Value

  • Symbol: WMCVX
  • 1-year return: 20.1%
  • 3-year return: 8.4%
  • 5-year return: 16.7%
  • 10-year return: 12.1%
  • Yield: 0.0%
  • Expense ratio: 1.20%

The focus: Temporarily underpriced shares in small, fast-growing firms.

The process: This is a growth-ier value fund. The portfolio’s 60-odd stocks fall into one of three buckets: undiscovered, little-known companies; firms suffering a temporary setback; and cheap stocks in steadier, slow-growth businesses.

The track record: The fund is back in a groove, with a 20% gain over the past 12 months. Its three-, five- and 10-year records rank among the top 68%, 77% and 85% of similar funds, respectively.

The upshot: Despite their recent poor performance, small-cap stocks offer higher growth potential than their large-company brethren. To cash in, you must have a long-term view and be willing to bear some turbulence.

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Fidelity International Growth

  • Symbol: FIGFX
  • 1-year return: 16.2%
  • 3-year return: 9.0%
  • 5-year return: 13.5%
  • 10-year return: 9.1%
  • Yield: 0.1%
  • Expense ratio: 1.01%

The focus: Growing foreign companies.

The process: Manager Jed Weiss homes in on firms with good growth prospects and strong niches in their businesses that give them pricing power – the ability to hold prices firm in bad times and raise them in good times.

The track record: Weiss outpaced the MSCI EAFE index in 10 of the past 12 calendar years. His fund’s average 10-year return beats 78% of all foreign large-company stock funds. FIGFX tends to hold up well in bad markets.

The upshot: Weiss picks stocks one at a time, but he says long-term growth theme are set to propel returns going forward. At the moment, top holdings include the likes of Japanese sensor firm Keyence and multinational chemicals firm Linde (LIN).

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Janus Henderson Global Equity Income

HFQTX stock tickerHFQTX stock ticker
  • Symbol: HFQTX
  • 1-year return: 3.7%
  • 3-year return: 0.3%
  • 5-year return: –
  • 10-year return: –
  • Yield: 7.5%
  • Expense ratio: 0.97%

The focus: High income in international-company equities.

The process: The fund aims “to provide a consistently high level of income while investing in overseas markets with a value bias,” says Ben Lofthouse, one of the fund’s three comanagers. “We look for the dividend to be sustainable.” To that end, firms with strong balance sheets, steady profits and cash flow are ideal for the fund. “Profitable companies have downside protection when things don’t go as well,” says Lofthouse.

The track record: Relative to other large-company foreign value stock funds, Global Equity Income shines. Over the past three years, the fund ranks among the top 33% of its peers. It currently yields 7.9%, and the fund says the annualized distribution yield “has consistently been around 6%.”

The upshot: In recent years, the managers have put aside some value measures, such as share price in relation to book value (assets minus liabilities), in favor of other gauges, such as the price-to-cash-flow ratio, that they say are better predictors of future returns. That should help them better identify values going forward.

14 of 25

Baron Emerging Markets

  • Symbol: BEXFX
  • 1-year return: 33.7%
  • 3-year return: 6.2%
  • 5-year return: 15.6%
  • 10-year return: 7.3%
  • Yield: 0.0%
  • Expense ratio: 1.35%

The focus: Emerging-markets firms of all sizes.

The process: Manager Michael Kass favors profitable, growing firms with steady competitive advantages. Asian tech giants Samsung, Tencent Holdings (TCEHY) and Taiwan Semiconductor (TSM) top the portfolio.

The track record: After a decade of sluggish returns, peppered with a few good years (such as 2019), emerging-markets stocks got socked again, this time by the coronavirus. But they have roared back. Over the past year, the fund has beaten the MSCI Emerging Markets index by more than 6 percentage points.

The upshot: There’s still uncertainty about the impact of the coronavirus on emerging-markets economies, but BEXFX should continue benefiting as EMs recover.

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AMG TimesSquare International Small Cap Fund

  • Symbol: TCMPX
  • 1-year return: 15.3%
  • 3-year return: 0.6%
  • 5-year return: 10.7%
  • 10-year return:
  • Yield: 1.4%
  • Expense ratio: 1.23%

The focus: Small firms in developed foreign countries.

The process: Four managers circle the globe to find best-in-class companies. Japan, the U.K. and Italy are the fund’s biggest country exposures.

The track record: Small-cap foreign stocks have not fared well compared with shares in larger companies in recent years, but TCMPX has beaten its benchmark, the MSCI EAFE Small Cap Index, since inception in 2013.

The upshot: Volatility doesn’t faze these managers. “We can’t guess what the market will do tomorrow, but we can invest in outstanding companies we think can continue to grow,” says lead manager Magnus Larsson.

16 of 25

Fidelity Select Health Care

  • Symbol: FSPHX
  • 1-year return: 25.9%
  • 3-year return: 17.5%
  • 5-year return: 18.1%
  • 10-year return: 18.9%
  • Yield: 0.5%
  • Expense ratio: 0.70%

The focus: Healthcare stocks.

The process: Eddie Yoon, manager since 2008, divides the portfolio into three parts: steady, growing firms, which make up the biggest chunk of the fund; fast-growing, proven companies with focused niches; and emerging biotech businesses.

The track record: Yoon’s 10-year annualized record beats 80% of all healthcare-focused funds.

The upshot: Yoon is getting defensive, piling into stable growers, while keeping an eye on innovative firms in areas such as gene and cell therapy.

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Vanguard Wellington

Composite image representing Vanguard's VWELX fundComposite image representing Vanguard's VWELX fund
  • Symbol: VWELX
  • 1-year return: 9.1%
  • 3-year return: 7.6%
  • 5-year return: 11.7%
  • 10-year return: 9.5%
  • Yield: 1.5%
  • Expense ratio: 0.25%

The focus: A balanced portfolio of roughly 65% stocks and 35% bonds at the moment. Buy shares through Vanguard if you’re new to the fund; otherwise, it’s closed.

The process: Managers focus on large-company, dividend-paying stocks, high-quality government bonds and investment-grade corporate debt. The fund yields 1.5%.

The track record: Despite the corona­virus, the fund has beaten 82% of its peers over the past five years.

The upshot: The managers like a bargain. Before the pandemic, they were waiting for discounts in large banks and consumer names. Defensive moves on the bond side, such as focusing on the highest-quality corporate debt and setting aside cash for a correction, were well timed.

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DoubleLine Total Return Bond

  • Symbol: DLTNX
  • 1-year return: 2.9%
  • 3-year return: 4.0%
  • 5-year return: 3.1%
  • 10-year return: 4.1%
  • Yield: 2.8%
  • Expense ratio: 0.73%

The focus: Mortgage-backed securities.

The process: Three managers balance government-guaranteed mortgage-backed bonds – which are sensitive to interest-rate moves (when interest rates rise, bond prices fall, and vice versa) but have no default risk – with non-agency mortgage bonds, which have some risk of default, but little interest-rate sensitivity.

The track record: The fund holds no corporate debt, which has hurt relative returns in recent years. Over the past five years, the fund’s 3.1% annualized return lags the Bloomberg Barclays U.S. Aggregate Bond index.

The upshot: Mortgage rates continue to sit near all-time lows. And the primary risk for most mortgage-backed bonds is the potential that mortgage holders will prepay their principal. We’re watching DLTNX closely. Meanwhile, it yields 2.8%.

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Fidelity Intermediate Municipal Income

  • Symbol: FLTMX
  • 1-year return: 3.7%
  • 3-year return: 4.4%
  • 5-year return: 3.3%
  • 10-year return: 3.8%
  • Yield: 0.8%
  • Expense ratio: 0.35%

The focus: Debt that is exempt from federal income taxes, issued by states and counties to fund expenses such as schools and transportation.

The process: Four managers choose high-quality, attractively priced muni bonds. Managing risk is a priority, too.

The track record: This fund consistently posts above-average returns in its category. It rarely tops the charts, but it tends to hold up better in downturns.

The upshot: Muni bonds were richly priced until COVID-19 events fueled a selloff. But low rates and steady demand has propped prices back up. The fund yields 0.8%, or 1.4% for investors in the highest tax bracket.

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Fidelity New Markets Income

  • Symbol: FNMIX
  • 1-year return: 2.5%
  • 3-year return: 1.5%
  • 5-year return: 6.3%
  • 10-year return: 5.5%
  • Yield: 4.1%
  • Expense ratio: 0.82%

The focus: Emerging-markets debt.

The process: Longtime manager John Carlson has retired, but his replacements, Jonathan Kelly and Timothy Gill, are longtime analysts for the fund. Not much will change. The fund will still focus on dollar-denominated government bonds, but Kelly says he will likely hold a more consistent position in corporate debt, now 15% of assets. Mexico, Turkey and Ukraine are its top country exposures.

The track record: Carlson’s 15-year return was in the top 23% of emerging-markets debt funds. We’re watching closely to see how Kelly and Gill do.

The upshot: Yields on emerging-markets debt are still near historic lows. But the exit path from the coronavirus is still uncertain, so while a recovery is expected at some point, a shadow remains over near-term economic growth projections in emerging countries. Even so, the fund’s yield, 4.1%, is attractive.

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Metropolitan West Total Return

Composite image representing Metropolitan West's MWTRX fundComposite image representing Metropolitan West's MWTRX fund
  • Symbol: MWTRX
  • 1-year return: 6.8%
  • 3-year return: 6.0%
  • 5-year return: 4.3%
  • 10-year return: 4.4%
  • Yield: 0.9%
  • Expense ratio: 0.68%

The focus: High-quality intermediate-maturity bonds.

The process: Four bargain-minded managers make the big-picture calls on the economy and invest accordingly in investment-grade bonds (those rated triple-B or better).

The track record: The fund got defensive early, nipping returns in 2016 and 2017. But its conservative position – it’s currently loaded up on Treasuries, government mortgage-backed bonds and investment-grade corporates – has been a boon over the past year, especially since the start of 2020. Total Return’s one-year return beats 63% of its peers, and its 10-year annualized return beats 65% of its peers. Both returns beat the Bloomberg Barclays U.S. Aggregate Bond index.

The upshot: The managers are “patient and disciplined,” says Morningstar analyst Brian Moriarty, and that should continue to set this fund’s performance apart over the long term.

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Fidelity Advisor Strategic Income

  • Symbol: FADMX
  • 1-year return: 6.9%
  • 3-year return: 5.1%
  • 5-year return: 6.3%
  • 10-year return: 4.8%
  • Yield: 2.4%
  • Expense ratio: 0.68%

The focus: The fund seeks to deliver more yield than the Bloomberg Barclays Aggregate U.S. Bond index by investing in a blend of government debt and junkier, higher-yielding bonds. The fund yields 2.4%.

The process: Comanagers Ford O’Neil and Adam Kramer make broad calls on which bond sectors to emphasize while specialists do the individual bond picking.

The track record: The fund has returned 6.3% annualized over the past five years, which has handily beaten the Agg index.

The upshot: These days, the fund holds mostly high-yield debt (roughly 46% of assets), government securities (20%) and emerging-markets bonds (15%).

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Vanguard High-Yield Corporate

  • Symbol: VWEHX
  • 1-year return: 5.0%
  • 3-year return: 5.6%
  • 5-year return: 7.4%
  • 10-year return: 6.2%
  • Yield: 3.0%
  • Expense ratio: 0.23%

The focus: Corporate debt rated below investment grade.

The process: Manager Michael Hong keeps risk at bay by focusing on debt rated double-B, the highest quality of junk bonds.

The track record: The fund struggles to top the charts in go-go years, but it leads in so-so years. All told, its 10-year annualized return beats 86% of its peers. It yields 3.0%.

The upshot: High-yield rates, on average, were near historic lows until the pandemic bumped them above 6% in early March, though they’ve since come back down to record lows from there. (When rates rise, bond prices fall, and vice versa.) We’re watching VWEHX carefully.

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Vanguard Short-Term Investment Grade

  • Symbol: VFSTX
  • 1-year return: 4.5%
  • 3-year return: 4.0%
  • 5-year return: 3.2%
  • 10-year return: 2.6%
  • Yield: 0.7%
  • Expense ratio: 0.20%

The focus: To deliver a higher yield than cash and short-term government bonds. VFSTX currently yields 0.7%.

The process: Three managers, who took over in April 2018, invest in high-quality corporate debt, pooled consumer loans and Treasuries, with maturities that range between one and five years.

The track record: The fund has returned 3.5% annualized over the past three years, which outpaces 87% of its peers.

The upshot: Low rates mean low yields for now. But pressing uncertainties, such as the unknown recovery time from coronavirus, negative rates in other parts of the world and geopolitical risks, make this fund a welcome haven.

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TIAA-CREF Core Impact Bond

  • Symbol: TSBRX
  • 1-year return: 5.1%
  • 3-year return: 5.3%
  • 5-year return: 4.2%
  • 10-year return:
  • Yield: 1.0%
  • Expense ratio: 0.64%

The focus: Bonds issued by companies that meet high ESG standards, as well as projects that deliver a measurable environmental or social impact.

The process: Veteran bond picker and lead manager Stephen Liberatore invests just under two-thirds of the fund in attractively priced, high-quality debt issued by firms that pass his own carefully honed ESG measures. He devotes about 40% of the fund’s assets to fund projects related to alternative energy, affordable housing or community development. The fund was formerly called Social Choice Bond.

The track record: The fund’s 4.2% an­nualized return over the past five years is just slightly below similar bond funds and the Agg index.

The upshot: Investors don’t sacrifice much performance or yield with these ESG- and impact-focused bonds.


Industry mourns death of PennyMac’s Stanford Kurland

PennyMac Mortgage Investment Trust announced that company founder and Non-Executive Chairman Stanford Kurland died at age 68 due to complications from COVID-19. Kurland had also been battling brain cancer.

The company and industry leaders alike mourned his passing, calling him an “esteemed industry leader, visionary and friend.”

“I am deeply saddened to share the news of Stan’s passing,” PMT President and CEO David Spector said. “COVID-19 has robbed us of a great leader, mentor and friend. Stan leaves an indelible mark not only on PennyMac, but on the mortgage industry he helped to build and shape. His storied career in mortgage banking spanned more than four decades.

“With his passion and vision, Stan led and built two of the largest and most influential companies in our industry, making home loans to millions of Americans,” Spector said. “He will be deeply missed by many in our industry and our community — including all of us here at PennyMac.”

Kurland began his professional career in 1975 in public accounting, practicing as a CPA for the firm now known as Grant Thornton. He spent 27 years at Countrywide Financial Corp. in various executive positions including chief financial officer, president and chief operating officer until his departure from Countrywide in 2006. During his tenure at the company, Countrywide grew from just over $1 million dollars in market capitalization to a leading financial services firm with over $25 billion in market value.

In 2008, Kurland founded PennyMac in partnership with BlackRock Mortgage Ventures and HC Partners, formerly Highfields Capital Management. Under his leadership, PFSI became one of the largest residential mortgage lenders and servicers in the U.S. and now employs more than 6,000 people across the country. Kurland served as PMT’s chairman and CEO until 2016, when he was appointed executive chairman. He retired from day-to-day responsibilities in 2020 but remained a guide for the company.

“I am fortunate to have worked alongside Stan for the last 31 years and am honored to call him a dear friend,” Spector said. “He was a genuine and gracious person to anyone he crossed paths with and he cherished his family and friends. On behalf of all of us at PennyMac, we send our deepest condolences to Stan’s wife, Sheila, and the entire Kurland family.”

PennyMac and its employees are among a wide group of housing and mortgage professionals who are mourning Kurland’s death.

“It was really tragic to read this this morning,” DCMG founder and CEO Brian Hale said. “I worked for Stan for eight years at CW. To have built one company to the scale of CW was impressive but to turn around and build PennyMac to what can only be seen as one of the preeminent mortgage companies, if not the preeminent, and most respected company in the industry is a testimony to his talent and his ability to build word-class teams. The industry lost a singular talent.”

Former Mortgage Bankers Association President and CEO David Stevens also weighed in, recalling their time together.

“Stan was an icon to the industry,” said Stevens, now CEO of Mountain Lake Consulting. “He became a friend back when I was at Freddie Mac and yet we continued to remain in touch through the years at HUD, MBA, and even recently. Stan was one of the leaders who stood up to Angelo and others at Countrywide in the latter years when he thought they were taking on too much risk. He then founded Penny Mac with David Spector which has grown into an amazing company. Stan always seemed ego-less to me, humble yet brilliant. Will miss him.”

The Kurland family requests that in lieu of flowers, donations be made to the UCLA Brain Tumor Program via the following link: