Ratings: First-Quarter Bond Fund Leaders, Laggards - TheStreet

Editor's note: As a special feature for April, TheStreet.com offers a series reviewing the first-quarter performance of mutual funds and ETFs. This is the second installment.

Sometimes "not bad" can be interpreted as fairly good. That could be said about the performance of open-end bond mutual funds during the first quarter of 2007.

While no bond fund came close to double-digit gains for the quarter, only three funds finished in negative territory. And those few setbacks were fractional. But of course, that is one of the main reasons to invest in bond funds -- their stability.

High-yield corporate and global bond funds dominated the roster of 10 leading performers below, with six on the list (four high-yield, two global bond). However, some fixed-income analysts have expressed concern over the shrinkage of yield premiums between high-yield instruments and emerging-market debt relative to U.S. Treasury bonds. So trend followers should be cautious about jumping aboard.

Note: These results do not include leveraged, "inverse" and institutional funds, and are reflected in the accompanying table of leaders and laggards in total-return performance for the first quarter of 2007.

Still, the top performers for the quarter weren't flash-in-the-pan standouts that came from nowhere. Eight of them have also achieved double-digit gains for the most recent 12 months.

Among the standouts in the leaders list is the

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Pioneer Global High Yield Fund (PGHYX), which has enriched its holders with gains of 13.04% for the most recent 12 months, 11.87% annually for the last three years and 15.06% per year compounded over the past five. The fund's 3.76% pace in the first quarter, if maintained, puts it on track for another double-digit year.

As has been the case with stock mutual funds and exchange-traded funds, selection was important with global income funds. While the top performer for the quarter -- the

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AllianceBernstein Global Strategic Income Fund (AGSAX) -- along with the Pioneer Global High Yield Fund, graced the leaders list, two other global income funds found their way onto the roster of 10 fixed-income laggards.

Only one of the laggards barely achieved a double-digit total return over the past 12 months. Of the remainder, none was able to post even a 5% return for that period. Not one of the laggards has achieved an annual return of more than 5% for the past three years or five years.

Richard Widows is a financial analyst for TheStreet.com Ratings. Prior to joining TheStreet.com, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia.