Babson Capital to launch two new high-yield fixed-income funds

By Toni Weeks

San Luis Obispo, Calif., April 15 – Babson Capital Funds Trust gave details about two of its upcoming new funds in an N-1A filing with the Securities and Exchange Commission. The new funds target high-yield debt and 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 Global High Yield Fund will seek to provide high current income generation and, where appropriate, capital appreciation.

The fund will normally invest at least 80% of its net assets in below-investment-grade fixed- and floating-rate corporate debt securities including bonds, notes and other fixed- and floating-rate income securities issued primarily by North American and Eastern European companies. It will seek to take advantage of inefficiencies between geographies, primarily the North American and European high-yield bond and other debt markets. It may invest in investments of any duration or maturity.

The portfolio management team will be comprised of Sean Feeley, Michael Freno, Scott Roth and Zak Summerscale.

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%. Including management fees of 0.6%, and taking into account the effects of a fee waiver agreement, total annual fund operating expenses are expected to be 1.05% for class A, 1.8% for class C and 0.8% for class I and class Y shares.

The Babson U.S. High Yield Fund will seek a high level of total return, with an emphasis on current income, by investing primarily in high-yield debt and related securities.

Under normal market conditions, the fund will invest at least 80% of its net assets in lower-rated fixed-income securities. It may also invest in convertible securities, preferred stocks, warrants, bank loans and other fixed-income securities. The fund may invest up to 15% of its total assets in securities that are not denominated in U.S. dollars. It expects to have a dollar-weighted average portfolio maturity ranging from four to 10 years.

Feeley, Freno and Roth are 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%. Including management fees of 0.55%, and taking into account the effects of a fee waiver agreement, total annual fund operating expenses are expected to be 1% for class A, 1.75% for class C and 0.75% for class I and class Y shares.

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

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