Three bond funds that suffered through a rough 2011 have posted returns in excess of 7 percent this year, reports the Wall Street Journal. The funds are the Franklin Templeton Global Bond Fund, Pimco Total Return Fund and the Loomis Sayles Bond Fund.

"Right now, they're all hitting it out of the park, they're just batting from different sides of the plate," said Eric Jacobson, Morningstar director for fixed-income fund research.

Pimco's Bill Gross said his firm is "substantially" invested in Treasury inflation-protected securities and high-grade mortgaged-backed debt.

Michael Hasenstab, Franklin Templeton Global PM, said he stood by bullish views toward Australia and developing Asian economies. He favors bonds from emerging markets that can shun the effects of the European crisis and will benefit if China manages to avoid a harsh slowdown. He told the Journal, "We do think that markets could get some confidence in the second half... Europe is bad, but there is no armageddon."

Co-PMs Dan Fuss and Kathleen Gaffney of the Looomis Sayles Bond Fund bet on investment-grade and high-yield corporate bonds. They still avoid Treasurys, according to Gaffney, because "Treasury yields could go lower in the short term, but we are looking at the bigger picture. The safe haven people are seeking today likely produces a very negative return in the longer term."  

Edited by: HFD


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