Prudential Investments has a reputation for being a blue-chip or conservative asset manager – it even has the word prudent right in its name. With those who suggest unconstrained or absolute-return bond funds are inherentlyor especially risky, Prudential would beg to differ – the firms lineup of so-called nontraditional bond funds recently extended to three with the launch of the Prudential Global Absolute Return Bond Fund (MUTF:PAJAX).
The Prudential Global Absolute Return Bond Fund is essentially the international version of the well-establishedPrudential Absolute Return Bond Fund(MUTF:PADAX). Both funds have an absolute return mandate, which means they pursue long-term positive returns, regardless of market conditions. What makes the new fund different is that it keeps at least 40% of its assets invested in foreign securities, including those from emerging markets.
Prudentials new fund is managed by Michael Collins, Robert Tipp, and Arvind Rajan, all of whom are managing directors at the firm. Mr. Collins is also Prudentials Senior Investment Officer, while Mr. Tipp is Chief Investment Strategist and Head of Global Bonds, and Mr. Rajan is Head of Global Macro. Together, the three portfolio managers invest the new funds assets in a wide variety of asset classes – including bonds and other debt instruments, mortgage- and asset-backed securities, currencies, and derivatives – in pursuit of its investment objectives. They also target the funds dollar-weighted effective duration at -5 to +5 years.
As stated earlier, this is at least the third nontraditional bond fund in Prudentials lineup – the others include the Prudential Unconstrained Bond Fund (MUTF:PUCAX) and the previously mentioned PADAX.
PUCAX, which launched on July 9 of this year, had respective one- and three-month returns of +2.02% and -0.59%, through October 31, ranking in the top 8% and 36% Morningstars Nontraditional Bond category for the respective periods.
PADAX, which debuted in March of 2011, returned +0.93% and -0.52%, respectively for the one and three months ending October 31, but a more impressive +1.27% (annualized) for the three
Shares of the new Prudential Global Absolute Return Bond Fund are available in A (PAJAX), C (MUTF:PAJCX), Q (MUTF:PAJQX), and Z (MUTF:PAJZX) classes. A and C shares have respective net-expense ratios of 1.20% and 1.95%, while Q and Z shares both have fees of 0.95%. Both A and C shares have minimum initial investments of $2,500, while Q and Z shares have no minimum for qualifying investors.
For more information,view a copy of the funds prospectus.
Past performance does not necessarily predict future results.