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The best US bond managers under Obama

The best US bond managers under Obama

President Barack Obama was swept into office in late 2008 on a wave of hope and goodwill, but four years on who in the world of US fixed income has risen to the fore?

There are 61 US bond managers in the Citywire database with a track record dating back four years, who have ridden the wave of policy change, QE, Operation Twist and everything else the Obama Administration has overseen.

Out of this class of fixed income specialists, the average manager returned 22.33% over the period December 2008 to September 2012.

Over the same period, the most commonly used Citywire benchmark, the Citigroup United States WGBI TR, rose 18.4%.

In total, 25 fund managers outperformed the average performance, while 36 returned higher than the sector index. So who are the standout performers?

Fund manager: Kevin Egan

Fund: Invesco US Senior Loan Fund A USD

Total return (December 2009-September 2012): 85.09%

Leading the pack is a familiar face in analysis pieces covering the Obama era, Invesco’s Kevin Egan.

Egan has previously been named one of the best performing US bond manager since the launch of QE2 and has also risen up the rankings following the country’s credit downgrade last summer.

He has run the $139 million fund since its launch as a Ucits-compliant vehicle in May 2006 and invests primarily in adjustable rate senior loans, with a focus on names in the US and Canadian markets.

Fund managers: Matthew Eagan, Kathleen Gaffney, Dan Fuss, Elaine M. Stokes

Fund: Loomis Sayles Multisector Income Fund

Total return (December 2009-September 2012): 80.00%

Four more managers familiar to Citywire readers are the Loomis Sayles quartet, who are the only other managers to have posted a return of 80% or higher over this analysis period.

Matthew Eagan recently told Citywire Global that his team is now looking at ‘good names in bad zip codes’ as they attempt to capitalise on the lack of love for European peripheral names.

They are mainly invested in corporate bond names at present, with a focus on BB, BBB and B-rated bonds, with investment grade financials being a particular area of interest.

The team underwent a change last week when Kathleen Gaffney opted to join rivals Eaton Vance. It is understood Loomis Sayles does not intend to replace Gaffney on the fund.

Fund managers: Paul DeNoon, Gershon Distenfeld, Douglas Peebles

Fund: AllianceBernstein-American Income Pf A USD

Total return (December 2009-September 2012): 57.43%

Rounding up our top three is another fixed income team, the AllianceBernstein trio of Paul DeNoon, Gershon Distenfeld and Douglas Peebles.

The New York-based managers have operated as a team since Distenfeld joined in December 1999. They have overseen the growth in assets under management of the fund to $12.8 billion over this period.

According to the most factsheet, the three managers have looked beyond the US market and added minor positions in a number of emerging market economies, such as Brazil, Russia, Turkey, Indonesia and Mexico.

Top performing US bond managers

Manager Fund name Total returns over analysis period
Kevin Egan Invesco US Senior Loan Fund A USD 85.09%
Matthew Eagan/Dan Fuss/Kathleen Gaffney/Elaine M. Stokes Loomis Sayles Multisector Income Fund I/D (USD) 80.00%
Paul DeNoon/Gershon Distenfeld/Douglas Peebles AllianceBernstein-American Income Pf A USD 57.43%
Ken Taubes Pioneer Funds Strategic Income A Dis Ann EUR/Pioneer Funds US Dollar Aggregate Bd I No Dis USD 55.11%
Kent Burns Franklin US Total Return I (acc) USD 50.05%
Richard Hsu/Madeline Lam Franklin Floating Rate AX (dis) 46.59%
Brian Brennan T Rowe US Aggregate Bond Jd USD 37.79%
Matthew Marra BGF US Dollar Core Bond Fund X2 USD 37.58%
Gibson Smith/Darrell Watters Janus Flexible Income I USD Inc 37.53%
William H Gross PIMCO GIS Total Return Bd Inst USD Acc/Skandia Total Return USD Bond A USD 36.79%
David Oliphant Threadneedle Dollar Bond USD Gross Acc 36.64%

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Richard Hsu
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84/349 in Mixed Assets - Balanced USD (Performance over 3 months) Average Total Return: 3.47%
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102/261 in Bonds - US Dollar (Performance over 3 years) Average Total Return: 8.74%
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94/261 in Bonds - US Dollar (Performance over 3 years) Average Total Return: 9.12%
Darrell Watters
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227/261 in Bonds - US Dollar (Performance over 3 years) Average Total Return: 3.00%
Elaine M. Stokes
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36/404 in Bonds - Global (Performance over 3 years) Average Total Return: 9.11%
Dan Fuss
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37/404 in Bonds - Global (Performance over 3 years) Average Total Return: 9.11%
Paul DeNoon
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27/404 in Bonds - Global (Performance over 3 years) Average Total Return: 10.19%
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32/404 in Bonds - Global (Performance over 3 years) Average Total Return: 9.69%
Kent Burns
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334/404 in Bonds - Global (Performance over 3 years) Average Total Return: -4.17%
Gershon Distenfeld
Gershon Distenfeld
20/77 in Bonds - Euro High Yield (Performance over 3 years) Average Total Return: 17.29%
Matthew Eagan
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45/71 in Alternative UCITS - Bond Strategies (Performance over 3 years) Average Total Return: 0.85%
William H Gross
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