Money market yields have continued to remain very low through the third quarter of 2015. Yields were contained by the Federal Reserve's commitment to keep the fed funds target rate in the 0.00% to 0.25% range as it tapered its asset purchases throughout 2014 and concluded its quantitative easing (QE) efforts last October.
The Ultra Short-Term Bond Fund returned 0.01% in the quarter compared with 0.10% for the Barclays Short-Term Government/Corporate Index. For the 12 months ended September 30, 2015, the fund returned 0.58% versus 0.27% for the Barclays Short-Term Government/Corporate Index. The fund's 1-year and Since Inception (12/03/2012) average annual total returns were 0.58% and 0.41%, respectively, as of September 30, 2015. The fund's expense ratio was 0.45% as of its fiscal year ended May 31, 2015.
For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results.
Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.
The fund benefited in the quarter from its curve positioning, especially in the two- and five-year part of the curve. The fund is more conservatively managed than its peers, which aided performance relative to the universe, and it has moved shorter in terms of duration over the last two months and is currently almost the shortest it has ever been. Currently, our strategy is in a holding pattern in terms of positioning, and we are putting cash to work.
With QE now behind us, market participants are looking forward to the time when the Fed will begin raising short-term interest rates. For the first time in more than six years, higher rates are a real possibility, but the timing of the actual liftoff seems elusive. We will continue to closely monitor the economy for signs that the Fed is about to raise interest rates. We believe that the Fed, when it finally does tighten its policy, will do so carefully and slowly. Thus credit risk is at the forefront of our concerns. We are positioned to take advantage of higher-quality and lower-duration investments, and our overall posture will skew toward the defensive. A shift in its policy could be accompanied by increased market volatility, which may create some opportunities to improve yield without introducing significant duration risk. As always, our focus is on minimizing the fund's price volatility while at the same time improving the income investors receive.