A continuing recovery in the mortgage-backed securities market contributed to solid returns for fixed-income managers in the year ended Dec. 31, according to Morningstar Inc.'s separate account/collective investment trust database.
High-yield strategies still represented the most of any strategy in the top 10, holding five of the spots, the same as the previous quarter.
“There's really not too much movement in the top 10, even though you do see some high yields drop and some high yields come on. Overall (there is) not too much turnover,” said Adam Baranowski, a data analyst with Morningstar in Chicago. “Probably the most notable thing is the emergence of the MBS composites. There's four of them on there.”
Domestic fixed income as a whole, though, did not have a good fourth quarter, according to Mr. Baranowski.
“For domestic fixed income, we had (an overall median) return of -0.65% compared to a positive 3.02% the previous quarter,” he said. “In fact, the only purely fixed-income broad categories that posted positive median returns for the quarter were high yield with 3.33% and convertibles with 7.11%.”
Mr. Baranowski said overall MBS strategies outperformed the overall domestic fixed-income market for the year ended Dec. 31, with a median return of 10.95%, compared with 7.41% for overall domestic fixed income. The Barclays Capital Government Credit index had a one-year return of 6.59%.