As manager of the Virtus Multi-Sector Short Term Bond Fund, David Albrycht, 50, has built a standout fund for investors who are looking for more than the flat returns they will get from a money market fund but are unwilling to take on too much risk.
“He's done an excellent job of steering this fund to top performance,” said Jeff Tjornehoj, senior research analyst for Lipper Inc. “He doesn't throw investors too far for a loop in going for returns.”
The manager of the $5.25 billion fund, which has about 933 holdings, hunts for bargains — or at least deep value. His team scours 14 segments of the fixed-income markets, including domestic and international short-term bonds, mortgage-backed securities and corporate bonds.
Even though the fund includes some low-grade holdings, re-search-ers compare it to investment-grade short-term-bond funds because the lower-grade holdings make up only a small component of the overall fund and it doesn't deserve to be moved to a riskier category, Mr. Tjornehoj said.
Investors in the fund enjoy exposure to a wide swath of the market, and it “keeps duration fairly low, so it's not going to get dinged if interest rates rise suddenly,” he said.
“Of course, it's not going to generate a lot of income,” Mr. Tjornehoj said. “But for those who want more than money markets and think taking on a bit more risk would be worthwhile, this would be a fit.”
Morningstar Inc. ranks the fund in the top 1% of 349 similar funds for its three-year return of 10.73%. Lipper has given it 11 performance awards since it was created in 1992 as the Phoenix-Goodwin Multi-Sector Short Term Bond Fund.
Mr. Albrycht, who began managing the fund soon after it was started, spent 29 years at The Phoenix Cos. Inc. He was hired first to work in the print shop while he pursued an undergraduate degree in finance at night at Central Connecticut State University. Mr. Albrycht was the first person ever hired by Phoenix as an analyst without having an MBA or a chartered financial analyst designation. He attained both of those within five years.
Mr. Albrycht began managing portfolios in 1992 after a series of analyst positions in private and public bonds. His mentor was Michael Haylon, now a managing director at asset manager Conning Inc., who started the multisector concept while he was chief investment officer at Phoenix.
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A year ago, Mr. Albrycht moved the fund and its best analysts over to Virtus Investment Partners Inc.
In his nearly 20 years at the helm of the fund, Mr. Albrycht has taken it into new sectors that have turned into lucrative opportunities. He said he has access to asset-backed-securities deals that other firms “aren't even going to get the call” about, because he's been a consistent participant in the market.
Each month Mr. Albrycht, a father of five children and avid fan of the Boston Red Sox, Boston Celtics and New York Giants, meets with the fund's 14 experts, who specialize in different bond sectors, to evaluate what types of issues the fund should be getting into or out of.
Mr. Albrycht stresses the importance of compensating these individuals based on the fund's performance, not assets under management, so that their interests line up with those of shareholders.
“I need them to say there should be no exposure to a certain market at the right time,” he said. “But they better be ready when we want to turn the corner and get back in.”
Mr. Albrycht and his team are boosting bank loan holdings and specifically like those of Landry's Inc., EZ Chem LLC and Cumulus Media Inc.
The fund takes a top-down approach when looking for value at the sector level and hasn't generated any capital gains in the last decade. It also has benefited from positive net inflows for the past five years.
“Even when the market melted down last summer, I got $280 million of positive flow,” Mr. Albrycht said.
He also reaches out regularly to advisers who invest their clients' money in the fund or those who might bring in clients with $2 million to $3 million, said Mr. Albrycht, who travels about five days a month.
“Accessibility for us is a huge key,” he said. “It's one way we over the last 20 years differentiated ourselves.”
He's extended that mantra of accessibility to cyberspace ever since he met with an adviser who mentioned to him that Bill Gross, manager of the Pimco Total Return Fund (PTTAX), felt a certain way about the direction of the markets.
He asked her if she had spoken to Mr. Gross and she said she had not, but she had read something he wrote in a blog. That's when Mr. Albrycht realized the power of social media.
“Social media lets people feel like they are in touch,” he said.
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