4 Top-Performing Multisector Bond Funds

Multisector bond funds represent the next step up the ladder of risk and yield from intermediate core-plus bond funds, offering opportunities for investors willing to be more aggressive with their fixed-income portfolio.

Funds in this sector can help provide a middle ground between core bond funds and riskier categories like emerging-market and high-yield, though exactly where this middle ground lies varies widely within the category. For example, among the four funds mentioned in this article, allocations to government bonds range from 18% to as high as 60%, while allocations to high yield or unrated bonds range from 12% to 59%. This means that while there are opportunities in this category, investors also need to examine the funds they invest in more closely than those in narrower categories.

With this variation in mind, investors considering multisector bond funds should consider the following four funds, all of which have high-conviction

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To screen for the top-performing funds in this category, we looked for those with the best returns over the last one-, three-, and five-year periods. All names that passed the screen were

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1. Fidelity Advisor Strategic Income Fund FIWDX
2. Loomis Sayles Strategic Income Fund NEZNX
3. Neuberger Strategic Income Fund NRSIX
4. Pimco Income Fund PIMIX

Multisector Bond Fund Performance

Over the past 12 months, the average fund in the multisector bond Morningstar Category returned 6.28%. On an annualized basis, multisector bond funds have climbed 6.94% over the past three years and gained 2.93% over the past five years. Meanwhile, the Morningstar US Core Bond Index has risen 5.20% over the past 12 months, gained 4.24% per year over the past three years, and gained 0.23% per year over the past five years.

What Are Multisector Bond Funds?

Multisector bond portfolios seek income by diversifying their assets among several fixed-income sectors, usually US government obligations, US corporate bonds, foreign bonds, and high-yield US debt securities. These portfolios typically hold 35%-65% of bond assets in securities that are not rated or are rated by a major agency such as Standard & Poor’s or Moody’s at the level of BB (considered speculative for taxable bonds) and below.

Screening for the Top-Performing Multisector Bond Funds

To find the best multisector bond funds, we looked at return data from the past one, three, and five years, using data available in Morningstar Direct. We screened for open-end funds and exchange-traded funds in the top 33% of their categories using their lowest-cost primary share classes for those periods. We also filtered for funds with a Morningstar Medalist Rating of Bronze, Silver, or Gold. We excluded funds with assets under $100 million and analyst coverage that was not 100%. This left four investments.

Because the screen was created with the lowest-cost share class for each fund, some may be listed with share classes that are not accessible to individual investors outside of retirement plans, or they may be aimed at institutional investors and require large minimum investments. The individual investor versions of those funds may carry higher fees, reducing returns to shareholders. Medalist Ratings may differ among the share classes of a fund.

Fidelity Advisor Strategic Income

• Share Class: Fidelity Advisor Strategic Income Z FIWDX

• Morningstar Medalist Rating

  : Silver

• : ★★★★

This $15.7 billion fund has climbed 9.23% over the past 12 months, outperforming the average fund in its category, which rose 6.28%. The Fidelity fund, which launched in October 2018, has climbed 7.89% over the past three years and gained 3.34% over the past five years.

Max Curtin, senior analyst at Morningstar, says the following about the fund:

Topnotch building blocks inspire confidence in Fidelity Strategic Income.

This team is impressive from top to bottom. Beginning with Fidelity veterans and co-lead managers Ford O’Neil and Adam Kramer, a robust management roster comprising managers with complementary skill sets inspires confidence, not only today but also for the fund’s long-term future. O’Neil joined the firm in 1989, began managing money in 1992, and was brought aboard this strategy as co-lead in 2012; his journey prior to that appointment included other similar allocator positions, including Fidelity Total Bond, which he has led successfully since 2004. Kramer’s resume is shorter but still impressive. He served as a high-yield credit analyst between 2000 and 2008 before moving into portfolio management; Kramer launched Fidelity Multi-Asset Income alongside O’Neil in 2015 before being named to this strategy as co-lead in 2017.

O’Neil and Kramer jointly own asset-allocation responsibilities, leaving bottom-up security-selection duties to a bevy of standout specialist managers. The duo works closely with those managers, as well as supporting macroeconomic and quantitative personnel, to gradually adjust the portfolio’s target allocations relative to internal neutral weightings. Those neutral levels have gone through various iterations over the strategy’s three-decade history but have not deviated from a balanced 50/50 split between investment-grade and below-investment-grade debt. Today, the neutral levels, as reflected by Fidelity’s internal blended benchmark, are as follows: high-yield bonds (40%), US government and investment-grade debt (30%), emerging-market debt (15%), foreign developed-market debt (10%), and bank loans (5%), as well as opportunistic sleeves for local emerging-market debt and international credit, which were added in 2022 to provide added flexibility.

Long-term results spanning O’Neil and Kramer’s eight-year partnership on the strategy are compelling. The fund’s Z shares’ 3.68% annualized return from August 2017 to July 2025 outpaced nearly 70% of distinct multisector bond Morningstar Category competitors.

Loomis Sayles Strategic Income

• Share Class: Loomis Sayles Strategic Income N NEZNX

• Morningstar Medalist Rating

  : Silver

• : ★★★★

Over the past 12 months, the Natixis fund rose 8.91%, while the average fund in its category rose 6.28%. The fund, which launched in February 2013, has climbed 8.18% over the past three years and gained 3.47% over the past five years.

Morningstar principal, Brian Moriarty, has the following to say on the fund:

Loomis Sayles Strategic Income continues to benefit from an impressive management team supported by robust resources.

Loomis Sayles veterans Matt Eagan and Brian Kennedy are at the helm here. Eagan joined the firm in 1997 and is now the leader of Loomis’ Full Discretion team following the retirements of Dan Fuss and Elaine Stokes in 2021 and 2023, respectively. He’s been a manager on this fund since 2006. Kennedy joined the firm in 1994 and joined this fund’s roster in 2013.

This team’s value-driven and often contrarian investing style set it apart from most multisector bond Morningstar Category peers, as does its use of equity (and equitylike) securities and non-US-dollar-denominated bonds. The use of those assets has been reduced since 2020 to make room for more securitized credit and emerging-market debt, which should soften some of the most extreme volatility tendencies of the fund, but it will remain among the most aggressive options within its category.

That has led to occasional bouts of underperformance, but over Eagan’s tenure, the fund has outperformed. From February 2007 through January 2026, its Y share class returned 5% annualized and beat 60% of distinct competitors in the multisector bond category. Investors should expect this strategy to remain more volatile than peers, but it remains a solid option for those with the requisite patience.

Neuberger Strategic Income

• Share Class: Neuberger Strategic Income R6 NRSIX

• Morningstar Medalist Rating

  : Bronze

• : ★★★★

The $8 billion fund has gained 7.45% over the past 12 months, while the average fund in its category is up 6.28%. The Neuberger Berman fund, which launched in March 2013, has climbed 7.89% over the past three years and gained 3.46% over the past five years.

The following is Curtin’s analysis of the fund:

Neuberger Berman Strategic Income has consistently added value by allocating across various fixed-income subsectors.

Deep supporting investment teams align well with the strategy’s goal to generate incremental outperformance through credit selection and sector allocation. CIO and lead manager Ashok Bhatia is chiefly responsible for the strategy’s performance, but he draws on a bevy of fellow multisector managers as well as sector specialists in this team-oriented approach. The comanagers include Neuberger Berman veterans David Brown, who specializes in investment-grade credit, and global rates specialist Thanos Bardas, each of whom has spent over two decades at the firm. In addition to taking on lead manager duties on the firm’s multisector funds like this one, Bhatia has also now officially succeeded longtime CIO Brad Tank, a four-decade veteran who transitioned to a senior advisor role at the end of 2024.

This strategy’s systematic multisector approach blends quantitative and qualitative analysis. Supporting sector specialist teams, such as those focused on securitized and non-investment-grade credit, are therefore paramount. Sector leaders combine forward-looking views with historical return distributions in a quantitative optimizer to generate a series of sector return distributions. From here, the team jointly finalizes tactical sector allocations at least every other week. Supporting sector groups handle selection and trade execution for their respective sleeves of the portfolio, following a methodical credit selection process that is standardized across Neuberger Berman’s fixed-income platform.

The strategy’s diversified return sources have led to strong long-term results for patient investors. The US fund’s 3.71% annualized gain over Bhatia’s tenure on the fund from January 2018 through June 2025 beat over 70% of distinct multisector bond Morningstar Category peers.

Pimco Income

• Share Class: Pimco Income Instl PIMIX

• Morningstar Medalist Rating

  : Gold

• : ★★★★

Over the past 12 months, the Pimco fund rose 7.96%, while the average fund in its category rose 6.28%. The fund, which launched in March 2007, has climbed 8.18% over the past three years and gained 3.90% over the past five years.

The following is an analysis of the fund by Morningstar senior principal Eric Jacobson:

Dan Ivascyn, Alfred Murata, and Joshua Anderson work to generate competitive returns and consistent monthly payouts, which they revisit each year and adjust when appropriate. Ivascyn is Pimco’s CIO; he and Murata are past Morningstar Managers of the Year. They draw on an army of managers and analysts in groups covering virtually every corner of the bond market, as well as the guidance of Pimco’s investment committee and input from macroeconomic specialists. That kind of description can come across as hype for some firms, but this one has a history of making great use of those resources.

That has been especially true here. The institutional shares of the strategy’s US mutual fund posted a 6.8% annualized return through March 2025 since Ivascyn began managing the fund at its April 2007 inception. That placed it at the top of its (distinct) rivals in the multisector bond Morningstar Category, with a history of lower volatility on average.

Although they remain a cornerstone allocation, the strategy’s nonagency mortgage exposure came down to 25% at the end of March 2025, from a recent high of 33% in February 2023. The team had gorged on beaten-down housing bonds after the global financial crisis, and their fat subsequent returns—aided by a long trend of improving sector fundamentals—helped fuel the strategy for years. Outstanding supply of those legacy, precrisis bonds has shrunk dramatically, though, and in recent years the team has snapped up large chunks of older mortgages from banks and ventured more broadly into newer nonagency structures.

The strategy has squeezed out returns from other sources, though, including meaningful contributions over the years from other nonagency securitized sectors, corporates, emerging markets, currency, and sensitivity to government debt markets. That, and the team’s proven ability to capitalize on Pimco’s resources, bode well for the strategy’s future, even as it relies much less on its legacy mortgage positions. Pimco is confident that its broad and deep reservoir of choices across global markets neutralizes the impact of the strategy’s growth. But it’s still an issue worth monitoring as it has ballooned to more than USD 310 billion across vehicles as of March 2025, a more than 30% increase since the end of 2023.