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| March 31, 2010 |
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There was little change in interest rates during the quarter ended March 31, 2010. Fixed income market conditions continued to improve modestly during the quarter, and risk was once again rewarded. Lower-quality securities generally outperformed higher-quality securities, and non-government sectors experienced strong excess returns (taking total return and duration - i.e., price sensitivity to changes in interest rates - into account). U.S. government securities trailed all other major fixed income sectors for the quarter.
The Munder Bond Fund outperformed its benchmark, the Barclays Capital U.S. Aggregate Bond Index, for the quarter. The Fund's performance benefited from an overweight in asset-backed securities and the financial sector of the corporate bond market, as well as its holdings of non-investment grade industrial securities. Among financials, the Fund's holdings focused on senior positions within the larger domestic and global financial institutions, since we remained cautious on regional banking exposure. Among asset-backed securities, we found strong relative value in subordinated securities, due to a combination of stricter underwriting guidelines and stricter structural integrity requirements of the rating agencies.
Looking forward, we remain generally optimistic about the relative performance of the non-government sectors of the fixed income market for the remainder of 2010. However, we believe there could be bouts of increased volatility and underperformance related to specific events, such as the increased risk related to securities issued by the Greek government and the removal of government programs that have been supporting the fixed income market. These programs include the Term Asset-Backed Loan Facility (TALF) and the Mortgage-Backed Securities (MBS) Purchase Program. However, we would consider modestly increasing the Fund's holdings of non-Treasury securities during periods of price weakness. |
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| December 31, 2009 |
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The Munder Bond Fund outperformed its benchmark, the Barclays Capital U.S. Aggregate Bond Index, for both the fourth quarter and 2009 as a whole.
In the bond market, the fourth quarter was a continuation of the trend that began in March 2009 with riskier assets outperforming less risky securities. This trend was exemplified by the fact that, on an excess return basis (taking total return and duration - price sensitivity to changes in interest rates - into account), all major sectors of the investment-grade fixed income market outperformed U.S. Treasuries. The greatest excess returns were generated by the commercial mortgage-backed (CMBS), corporate bond and asset-backed (ABS) sectors. Since the Fund's two largest overweights were in the CMBS and ABS sectors, this contributed significantly to positive relative performance. In the corporate bond market, the Fund was overweighted in the financial sector, which also contributed positively to relative returns. On a security-specific level, the Fund benefited from strong price appreciation in its subordinate ABS holdings and increased exposure to that sector over the quarter. The Fund's modest position in high-yield holdings was also a strong contributor to relative performance, compared to investment-grade industrial securities.
Looking forward, expectations of a continued economic recovery into 2010 present a relatively attractive backdrop to maintain exposure to non-government holdings. However, acknowledging the strong rally by riskier assets, we are carefully evaluating "up in quality" trades. The Fund maintained very little exposure to subprime and high-yield securities, and we do not expect a material change to that positioning. |
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| September 30, 2009 |
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The third quarter was a continuation of the trend that began in March 2009, with riskier assets outperforming less risky ones. This
trend was exemplified by the fact that, on an excess return basis (taking total return and duration - price sensitivity to changes in
interest rates - into account), all major sectors of the investment-grade fixed income market outperformed U.S. Treasuries. The
greatest excess returns were generated by the commercial mortgage-backed (CMBS) sector of the market, followed by the corporate
bond and asset-backed (ABS) sectors.
The Munder Bond Fund significantly outperformed its benchmark, the Barclay's Capital U.S. Aggregate Bond Index for both the
quarter and year-to-date time periods ended September 30, 2009. The Fund's two largest overweights were in the CMBS and ABS
sectors, and this contributed significantly to positive relative performance. Within the corporate bond market, the Fund was
overweighted in the financial sector, which also had a positive impact on relative performance. Additionally, on a security-specific
level, the Fund benefited from strong price appreciation in its subordinate ABS holdings, some non-agency mortgage holdings and its
hybrid bank capital holdings. In contrast to these positive factors, the Fund was underweighted in its exposure to industrial corporate
bonds, which had a modestly negative impact on relative performance.
Looking forward, given the strong rally of riskier assets, we are carefully evaluating individual holdings and looking for attractive
opportunities in higher quality securities. Given the technical support provided by the Federal Reserve's participation in the ABS,
CMBS and traditional mortgage-backed markets, we expect to maintain exposures to those sectors while evaluating the likely impact
of the Federal Reserve's gradual exit from active market participation sometime over the next twelve months. The Fund maintains
very little exposure to subprime and high yield securities, and we do not expect a material change in that positioning. |
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Past performance does not guarantee future results. The Fund's investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus and summary prospectus contain this and other important information about the Fund. To obtain a prospectus and summary prospectus, click here. Read the prospectus and summary prospectuses carefully before investing.
RISKS: Bond Funds will tend to experience smaller fluctuations in value than stock funds. However, investors in any bond fund should anticipate fluctuations in price, especially for longer-term issues and in environments of rising interest rates. A significant portion of the Fund is invested in mortgage-backed securities, which are subject to higher prepayment risk than corporate bonds and notes, particularly in periods of declining interest rates. The Fund also invests in Yankee securities (i.e., dollar-denominated securities of foreign issuers), which involve additional risks due to foreign economic and political conditions, and differences in financial reporting standards.
The Barclays Capital U.S. Aggregate Bond Index is a market-value-weighted index designed to measure the U.S. investment-grade, fixed-rate bond market, which includes publicly issued, fixed-rate, non-convertible, dollar-denominated, taxable U.S. government, corporate, mortgage pass-through and asset-backed securities rated investment grade or higher. You cannot invest directly in an index, securities in the Fund will not match those in an index, and performance of the Fund will differ. Although reinvestment of dividend and interest payments is assumed, no expenses are netted against an index’s returns.
Credit ratings are issued by credit rating agencies and reflect the agency's assessment of the risk of a bond based on the issuer's capacity to meet its financial commitment on the bond. Ratings range from AAA (highest credit quality) to D (in default).
Munder Funds are distributed by Funds Distributor, LLC 07/10
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| Munder Funds distributed by Funds Distributor, LLC. |
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