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Bond Funds That Got Flight to Quality Wrong

The worst-rated fixed-income mutual funds were caught on the wrong side of the flight to quality.

Seven of the 25 fixed-income funds with the lowest overall scores from TheStreet.com Ratings' quantitative investment model focus on high-yield debt. They bear the worst possible "reward," "risk" and "overall" grades from the model.

At the bottom is Oppenheimer Champion Income A (OPCHX), a corporate, high-yield fund that has tumbled 79% over the past year.

The Direxion 10-Year Note Bear 2.5X Fund (DXKSX) gained 2.4% in February, but is still down 22% over 12 months. The past year was the wrong time to be short U.S. Treasuries with 250% leverage.

TheStreet.com Ratings' quantitative model condenses fund data into a single composite opinion of risk-adjusted performance. There are also "reward" and "risk" grades. While there is no guarantee of future performance, TheStreet.com Ratings' grades provide a solid framework for making informed investment decisions.

The grades can be interpreted as follows: A is "excellent" and considered a "buy" recommendation. B is "good" or "buy." C is "fair" or "hold." D is "weak" or "sell." And E is "very weak" or "sell." A plus or minus sign designates that a fund is in the top or bottom third of funds with the same letter grade.

Worst-Rated Fixed-Income Funds
Fund
Ticker
Performance Grade
Risk Grade
Overall Grade
Total Return 1 Year
Oppenheimer Champion Income A
OPCHX
E-
E-
E-
-78.79%
Helios Sel Intermediate Bond A
HSIBX
E-
E-
E-
-81.63%
Helios Sel High Income A
HIFAX
E-
E-
E-
-69.62%
Helios Sel Short Term Bond A
MSBIX
E-
E-
E-
-76.56%
Metropolitan West Alpha Trak 500
MWATX
E-
E-
E-
-58.61%
Azzad Ethical Income Fund
AEIFX
E-
E-
E-
-48.57%
PIMCO Intl StkPlus Tr Strat A
PIPAX
E-
E-
E-
-43.91%
Oppenheimer Roch National Muni A
ORNAX
E-
E-
E-
-37.33%
Credit Suisse Commdty Retrn Str A
CRSAX
E-
E-
E-
-49.81%
J Hancock High Yield A
JHHBX
E-
E-
E-
-49.16%
Principal Preferred Sec A
PPSAX
E-
E-
E-
-40.78%
Fidelity Adv Hi Income Advantage A
FAHDX
E-
E-
E-
-38.90%
Van Kampen Senior Loan Fund A
VSLAX
E-
E-
E-
-37.52%
Direxion 10 Year Note Bear 2.5X Fd
DXKSX
E-
E-
E-
-22.42%
Oppenheimer AMT-Free Municipals A
OPTAX
E-
E-
E-
-31.18%
Integrity High Income A
IHFAX
E-
E-
E-
-30.87%
Oppenheimer Core Bond A
OPIGX
E-
E-
E-
-41.69%
Henderson Worldwide Income Fund A
HFAAX
E-
E-
E-
-36.86%
ING Senior Income A
XSIAX
E-
E-
E-
-29.22%
Oppenheimer CA Municipal A
OPCAX
E-
E-
E-
-27.73%
Putnam Diversified Income A
PDINX
E-
E-
E-
-31.23%
Highland Floating Rate Advantage A
XSFRX
E-
E-
E-
-37.11%
Pioneer Global High Yield A
PGHYX
E-
E-
E-
-33.28%
Pioneer High Yield A
TAHYX
E-
E-
E-
-32.32%
Nuveen High Yield Muni Bond A
NHMAX
E-
E-
E-
-30.44%
Source: TheStreet.com Ratings. (Data as of most recent monthend.)

Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.

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