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3 Bond ETFs That Are Doing Much Better Than Bill Gross

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Aaron Levitt
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Things haven’t been going well for former bond king Bill Gross. Ever since his ouster at bond-house Pimco, Gross has been on a roller coaster ride. That includes a recent divorce and battle with Pimco’s parent Allianz over compensation awards. All of this seems to be affecting the former Bond King’s returns. Since moving to Janus, Gross’s Janus Henderson Global Unconstrained Bond Fund (MUTF:JUCIX) hasn’t been a star performer. In fact, it has been pretty terrible.

As of the end of the last quarter, JUCIX is down more than 6.3% for the year. According to Lipper, it’s one of the worst performers in the Alternative Credit Focus Funds category. It’s no wonder investors have pulled more than $580 million from the bond fund over the year.

But where should investors place their hard earned cash? Luckily, there are plenty of actively managed bond ETFs that are outperforming Gross this year. By betting on these bond ETFs, investors can save their portfolios from all the drama and poor returns.

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With that said, here are three bond ETFs that are performing better than Bill Gross.

Bond ETFs That Are Doing Better Than Bill Gross

Bond ETFs That Are Doing Better Than Bill Gross SPDR DoubleLine Total Return Tactical ETF (TOTL)
Bond ETFs That Are Doing Better Than Bill Gross SPDR DoubleLine Total Return Tactical ETF (TOTL)

Source: Shutterstock

SPDR DoubleLine Total Return Tactical ETF (TOTL)

Year-to-Date Return: -0.84%

Turn’s out, new Bond King Jeff Gundlach at DoubleLine Capital is doing better than Gross. His SPDR DoubleLine Total Return Tactical ETF (NYSEARCA:TOTL) has been flat this year. That’s pretty impressive considering Gross’s terrible performance and that the Bloomberg Barclays U.S. Aggregate Bond Index is down by nearly 2%.

Gundlach has built one of the better bond ETFs by being nimble. As an active fund, TOTL can trade in and out of bonds as opportunities arise. Today, Gundlach has placed the majority of the ETF in mortgage-backed securities. Treasury, bank loans, commercial mortgage securities and investment-grade corporate bonds round out the top five holdings. This is a vastly different make-up than the index. As a result, Gundlach has managed to outperform the index since its inception. He’s managed to outperform Gross as well.

So, Gundlach has been pretty correct with his calls. And that’s exactly what you’re buying when it comes to active bond ETFs. With Gross’ knowledge and predictions failing, TOTL makes an ideal replacement fund.

And it’s a pretty cheap one at that. Expenses for TOTL run at 0.55%. Meanwhile, the combination of bonds and fixed income securities pays a cool 3.96% yield. All in all, Gundlach has earned the Bond King title.

Bond ETFs That Are Doing Better Than Bill Gross

Bond ETFs That Are Doing Better Than Bill Gross RiverFront Strategic Income Fund (RIGS)
Bond ETFs That Are Doing Better Than Bill Gross RiverFront Strategic Income Fund (RIGS)

Source: Shutterstock

RiverFront Strategic Income Fund (RIGS)

Year-to-Date Return: -0.73%

Most investors have never heard of ALPS. But the firm is quietly becoming one of the largest sponsors of investment vehicles. That includes a hefty dose of stock and bond ETFs. One of its better funds is the $214 million actively managed RiverFront Strategic Income Fund (NYSEARCA:RIGS).

RIGS uses a proprietary system of pertinent economic indicators and market conditions, as well as yield, maturity and currency considerations to make its bond selections. That means it’s 100% data driven.

Because of this wide mandate, RIGS net is very wide as well. The fund is allowed to dabble in everything from U.S. and foreign government and corporate debt to convertible bonds and even munis. Today, the signs are pointing toward corporate bonds, with roughly 97% of its holdings in various corporates. That mandate is also more about total return than just generating income. Exactly, what Bill Gross’ Janus fund is designed to do.

But RIGS is actually outperforming the index and Gross.

While returns have been flat, they have been better then the previously mentioned Aggerate index. In fact, they’ve been about double. With that said, RIGS makes an ideal selection to beat Bill Gross and his fund.

Bond ETFs That Are Doing Better Than Bill Gross

Bond ETFs That Are Doing Better Than Bill Gross Newfleet Multi-Sector Income ETF (MINC)
Bond ETFs That Are Doing Better Than Bill Gross Newfleet Multi-Sector Income ETF (MINC)

Source: Shutterstock

Newfleet Multi-Sector Income ETF (MINC)

Year-to-Date Return: 0.07%.

AdvisorShares has long been the leading fund family when it comes to active ETFs. This includes a hefty stable of bond-focused funds. The best of the best could be the Newfleet Multi-Sector Income ETF (NYSEARCA:MINC). With a positive return year-to-date — a difficult feet considering rising rates — MINC is one of the top funds in the category and it certainly beat Gross’s negative 6% return.

Like Gross’s fund, MINC is an unconstrained or multi-sector bond fund and it is able to tap more than 14 bond sectors to create its portfolio. That is done in a two-step process. First, MINC’s managers will over or underweight sectors they feel have a better chance of outperforming in the current market environment.

The managers of MINC then use a bottom’s up approach to security selection. The focus on bottom sectors like treasuries and mortgage-backed securities will be on picking what parts of the curve are more important, while the focus on top sectors — like high-yield/junk bonds or emerging market credits — is on credit worthiness and risk.

This creates a portfolio designed to outperform in the current market. Income as part of a total return is a key reason for that outperformance. MINC currently yields more than 2.80%. The strategy seems to be working. MINC has earned five stars from Morningstar and it has managed to beat the AGG and now Gross for most of its life.

The only drawback is its expenses, which are at 0.76%. However, even with that high hurdle, the fund is pulling its weight as a great bond ETF to own.

As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities. 

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