The multisector bond Morningstar Category groups together funds that diversify their assets across fixed-income sectors. Most include exposures to sectors like high yield and emerging markets that would make them too aggressive for a traditional investment-grade-focused category, and they aim for higher returns than core offerings while still enjoying more diversification than those focused solely on riskier sectors. The multisector category is not divided into long- and short-term offerings, though, which is worth remembering when evaluating peer group rankings because falling interest rates greatly advantage the former and rising rates the latter.
Even over a longer stretch, a fund’s interest-rate sensitivity can make a big difference in its peer group showing. Over the past five years through December 2024, for example, Intrepid Income’s ICMUX 7.25% annualized gain was nearly 3 times the 2.55% multisector bond median and…
