Babson Capital to launch two new investment-grade fixed-income funds

By Toni Weeks

San Luis Obispo, Calif., April 15 – Babson Capital Funds Trust gave details about two of its new upcoming funds in an N-1A filing with the Securities and Exchange Commission. The new investment-grade funds are expected to launch in June.

Both funds will offer class A, class C, class I and class Y shares. The ticker symbols have not yet been determined.

The Babson Active Short Duration Bond Fund will seek to achieve a high total rate of return mostly from current income while minimizing fluctuations in capital values by investing primarily in a diversified portfolio of short-term investment-grade fixed-income securities.

Under normal market conditions, it will invest at least 80% of its net assets in investment-grade fixed-income securities, including dollar-denominated corporate obligations, securities issued or guaranteed by the U.S. government or its agencies or instrumentalities and U.S. and foreign issuer dollar-denominated bonds. Normally, 10% or less of the fund’s total assets will be invested in below-investment-grade debt securities. The fund seeks to maintain a dollar-weighted average duration of less than three years.

The portfolio management team will be comprised of William Awad, Ronald Desautels, David Nagle, Charles Sanford and Doug Trevallion.

Class A shares are subject to a maximum sales load of 2.5%, while both class A and class C shares will incur a maximum contingent deferred sales charge of 1%. Including management fees of 0.35%, and taking into account the effects of a fee waiver agreement, total annual fund operating expenses are expected to be 0.8% for class A, 1.55% for class C and 0.55% for class I and class Y shares.

The Babson Total Return Bond Fund will seek a superior total rate of return by investing at least 80% of its net assets in fixed-income securities, which typically include dollar-denominated corporate obligations and bank loans, securities issued or guaranteed by the U.S. government or its agencies or instrumentalities and U.S. and foreign issuer dollar-denominated bonds. Up to 25% of the fund’s total assets may be invested in securities not denominated in U.S. dollars, and up to 25% may be invested in high-yield debt securities.

The investment manager expects the fund’s portfolio dollar-weighted average durational to generally match, plus or minus 2.5 years, the average duration of the Barclays Capital U.S. Aggregate Bond index.

Awad, Nagle, Sean Feeley and Charles Sanford will be the portfolio managers.

Class A shares are subject to a maximum sales load of 4%, while both class A and class C shares will incur a maximum contingent deferred sales charge of 1%. Total annual fund operating expenses are expected to be the same as those in the active short duration fund.

Charlotte, N.C.-based Babson Capital Management LLC will serve as the investment adviser.

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