Wilshire Pairs Bond Kings for Unconstrained Fund
Investors are directing their assets into passively managed funds rather than active ones more now than ever before, but don't write off actively managed funds - or star funds managers - just yet, said Jason Schwarz, president of Wilshire Funds Management.
'At the end of the day, active management still makes up the majority of assets and plays an important role in helping investors navigate potentially more challenging and more volatile equity and fixed income markets,' said Schwarz.
In March, Schwarz launched the Wilshire Income Opportunities Fund, a multi-sector actively managed bond fund structured as an opportunistic, go-anywhere bond fund investing in corporate bonds, mortgages, structured credit, high yield bonds and bank debt. The fund takes advantage of more exotic fixed income exposures such as CLOs, ABS, MBS, and EMD to deliver attractive yields.
The fund, which is subadvised by star fund managers Jeff Gundlach from DoubleLine Capital and Guggenheim's Scott Minerd, has attracted $410 million since its roll out.
'We think Scott Minerd and Jeff Gundlach are two of the most skilled managers around,' said Schwarz. 'They do complimentary things. Guggenheim has a strong platform for investing in structured credit like CLOs, out of benchmark securities and more exotic fixed income instruments. And if you look at what Gundlach has been doing in the mortgage space, ABS, MBS and emerging market debt, you can see why those two fund managers are attractive.'
As for the trend toward unconstrained bond funds and potential trouble in having managers with the ability to 'go anywhere' to find yield, Schwarz said the Wilshire Income Opportunities Fund's construction actually reduces the risk of fund managers stretching too far to add additional yield.
'Wilshire as the advisor, employing two subadvisors, we think from a governance framework we are better able to manage the overall exposures of this fund,' said Schwarz. 'We clearly want to give these fund managers the latitude to do what they do really well, but within certain constraints and parameters that we set and we monitor and that we ensure they are adhering to.'
