With a solid long-term track record and an experienced manager, this offering has everything that bond investors need in this market.—The Editors

If you owned shares of Loomis Sayles Bond (LSBRX) in 2008, you probably don’t give a fig that manager Dan Fuss has never changed his strategy.

Fuss favors bonds that the rest of the market hates, purchasing beaten-down issues and waiting for them to rebound. This strategy cost him big in 2008, when he insisted that the selloff in corporate bonds was completely out of proportion with fundamental values. But Fuss’ persistence paid off big the following year, when yield-hungry investors piled into corporate bonds.

With valuations on corporate debt becoming stretched, Fuss and his team have stepped back from that market in favor of asset-backed bonds and foreign-government issues.

The fund has the leeway to invest as much as 20 percent of its assets in securities issued outside of North America, enabling Fuss to take advantage of opportunities created by Europe’s sovereigndebt crisis.

With concerns mounting about the direction of the US dollar, Fuss has upped his stakes in debt denominated in Canadian and New Zealand dollars as well as the Indonesian rupiah and Norwegian krone.

The fund’s position in high-yield issues, a group that historically performs well when the Federal Reserve raises rates, now accounts for a quarter of investable assets—a shift from the investment-grade credits Fuss picked up on the cheap early last year.

The fund’s cash position is also on the uptick, having reached almost 5 percent of assets. Management expects rising interest rates to increase volatility, creating profitable dislocations; a store of dry powder will enable Fuss and his cohorts to take advantage of these opportunities.

Fuss has his eyes on Treasury bonds, though he admits that the timing of any move remains uncertain. His investment thesis is simple. With a growing federal deficit, the market for Treasuries could face an oversupply in the coming years. The government will have to address these concerns sooner rather than later; when that happens, opportunities will abound.

Fuss is one of a handful of bond fund managers who have the experience and track record that inspire confidence in a period of overwhelming uncertainty. Having survived the stagflation of the 1970s, the recession of the 1980s and our most recent woes, Fuss has been through every economic cycle.

That’s not to suggest that Loomis Sayles Bond won’t endure its share of volatility. Fuss takes full advantage of his go-almost anywhere mandate, which can lead to some short-term fluctuations.

Taking a deep-value approach to bond selection, Fuss moves into battered areas of the bond market before the beating has ended, relying on his experience to guide the way.

This tried-and-true approach has generated an 8.6 percent gain for the fund since its inception, ranking it in the top 10 percent of its category over the past 15 years.

There are better-performing bond funds out there, but few, if any, feature such a long-tenured manager. And now is the time to favor experience over youth.—Benjamin Shepherd

Why to Buy

• Experienced manager

• Value approach

• Solid long-term track record