Estimates of Gross Domestic Product (GDP) for the first three months of this year have been revised to 3.5%, and retail sales, housing and employment statistics all came in above previous forecasts, until weakening somewhat in late March. During the period, 10-year Treasury rates rose from 1.75% to a high of 2.06%, before falling back to 1.85% at quarter end.
With a return of -0.47%, the Fund underperformed its benchmark based on yield curve positioning and duration. An overweight to mortgage-backed securities also detracted from performance.
If you're a conservative investor who prefers the income and quality assurance offered by government securities, you may find this Fund attractive. It is best suited for investors with relatively low-risk profiles and can provide a solid-core holding for income-oriented investors of all ages.
- Invest primarily in securities issued or guaranteed by the U.S. government or by its agencies.
- Select high-quality securities with maturities, under normal circumstances, between one and 10 years, with risk exposure managed in an effort to achieve reasonable returns.
- Buy and sell securities using a relative value approach that employs models that analyze and compare expected returns and assumed risks.