Morningstar - Q2 2023 - 53

Moderate Doesn't Mean Mundane
Metropolitan West Low Duration holds up better than peers
during market volatility.
Brian Moriarty
BEST IDEAS: MANAGER
This article is adapted from the fund's Morningstar Global Fund Report dated
March 31, 2023.
Metropolitan West Low Duration Bond MWLIX is led by an impressive group
of investors who execute a time-tested investment approach. With new
CEO Katie Koch settled into her role, there is clarity around the leadership of
the firm and this strategy. As a result, its Morningstar Analyst Rating
has been upgraded to Gold for its cheapest share class and Silver for its
more expensive share classes.
The strategy is managed by Laird Landmann, Steve Kane, and Bryan Whalen,
a veteran team that will benefit from the stabilizing appointment of
Koch as CEO. Landmann and Kane have worked together since the early 1990s,
with stints at Hotchkis & Wiley and Pimco before founding MetWest,
alongside former CIO Tad Rivelle, in 1996. Whalen joined the firm in 2004 and
became a generalist in 2013; he was named co-CIO alongside Kane when
Rivelle retired in late 2021.
The supporting cadre of specialists, analysts, and traders remains among the
strongest in the industry, and the firm executes a disciplined valuation
framework that often leads managers to cut risk as market cycles age and
add risk during periods of dislocated prices.
This strategy is benchmarked against the ICE BofA 1-3 Year U.S. Treasury
Index, but the managers invest heavily in corporate bonds and securitized debt.
This means it will occasionally have a bolder credit profile than short-term
bond peers, which has caused trouble in the distant past. But the managers
have moderated their risk appetite in the past decade. Since the global
financial crisis, their valuation discipline plays a much stronger role here.
That more moderate risk appetite has helped this strategy hold up better than
peers during market volatility, which is a key consideration for a short-term
bond fund. Of course, that has also led to more moderate relative returns,
especially in periods of credit exuberance. That may cause it to lag over certain
periods, but this remains a strong option for the long haul. K
Brian Moriarty is an associate director of manager research at Morningstar Research
Services LLC.
Metropolitan West Low Duration Bond MWLIX
Stats 03/31/2023
Morningstar Analyst Rating
Œ
Fee Level
Average
Process
High
Growth of 10K 03/31/2023
$11K
10
9
04/2020
Mod
Ext
04/2021
Morningstar Style Box 02/28/2023
Ltd
Snapshot as
of most recent
portfolio.
04/2022
Morningstar Ratings 03/31/2023
Period
Mstar
Return
3-Yr
5-Yr
10-Yr
Mstar
Risk
Metropolitan
West Low
Duration Bond
10.13
Morningstar US
1-3 Yr Core Bond
9.84
Morningstar Category
Short-Term Bond
10-Yr Annlzd Return
1.27%
Morningstar Pillars 03/31/2023
People
High
Parent
Average
Expense Ratio
0.41%
10-Yr % Rank in Cat
43
Mstar
Rating
Average Average QQQ
Average Average QQQ
Average Below Avg QQQ
Overall Rating
Top 5 Sectors 02/28/2023
■ Fund ❙ Category Average
Securitized
Corporate
Government
Cash & Equivalents
Municipal
23.22
32.59
26.67 31.74
2.06
0%
4.86
0.41 1.72
10
20
morningstar.com/products/magazine
30
40
53
36.41
35.39
QQQ
Low
Mid
High
https://www.morningstar.com/funds/xnas/mwlix/quote https://www.morningstar.com/authors/1968/brian-moriarty http://www.morningstar.com/products/magazine
Morningstar - Q2 2023

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