Long-duration bond strategies for the fifth consecutive quarter dominated the list of top-performing domestic fixed-income managers for the year ended Sept. 30, according to Morningstar Inc.'s separate account/collective investment trust database.
Long-duration strategies accounted for nine of the overall top 10 strategies for the year ended Sept. 30. The previous quarter, seven of the top 10 strategies were long-duration strategies.
The median return for the domestic fixed-income universe was 2% and the Barclays U.S. Government/Credit index returned 2.7% for the year ended Sept. 30.
Over the three- and 12-month periods ended Sept. 30, long-duration strategies returned a median 1.56% and 2.35%, respectively, slightly below the Barclay's U.S. Long Government/Credit index's returns of 2.18% and 3.09%, respectively.
Other fixed-income categories did not perform as well. Limited-duration fixed-income strategies returned a median 0.34% and 1.4% in the quarter and year ended Sept. 30, respectively, and domestic high-yield strategies returned a median -4.1% and -2.1%, respectively, over the same periods.
Long-duration strategies have been particularly volatile but picked up in the third quarter, said Sarah Bush, director of fixed-income strategies, manager research at Morningstar, Chicago.
“We clearly had a very big risk-off trade in the third quarter,” Ms. Bush said. “The dominant story we saw in the news was concern about growth in China, and another was the double dip in oil prices. Then obviously you saw the (Federal Reserve) back off and not move ahead with the rate hike. You look at the third quarter, you saw an amplification of the trends we saw for the whole year.”
As a result of the prolonged prominence of long-duration strategies, the top 10 consists mostly of familiar faces.