For the most widely held bond funds in 2024, taking on riskier bonds was a winning strategy. Meanwhile, funds focused on longer-term, interest-rate-sensitive securities got hammered.
The $172 billion PIMCO Income Fund PIMIX performed best of any of the largest active or index bond funds with its 5.4% return in 2024. PIMCO Income is the only multisector bond fund among the 10 largest active or passive bond funds. Funds in this category hold greater weightings of riskier assets than the intermediate core or core-plus categories that dominate the ranks of the most widely-owned bond funds.
Meanwhile, the $50 billion iShares 20+ Year Treasury Bond ETF index fund TLT was by far the worst performer among the group. With its portfolio of long-term bonds, which are more sensitive to changes in interest rates, the ETF lost 7.4% for the year.
More broadly, intermediate core bond funds gained an average of 1.8% for the year, while intermediate…
