Interest rates appear headed higher, which has definitive ramifications and potentially elevates risks associated with many fixed income strategies. Investors should take this opportunity to review their risk profiles and, possibly, reconfigure their fixed income portfolios.
An updated approach
A new environment suggests that investors may want to reallocate to fixed income investments that are less sensitive to rising rates. Together,
Victory INCORE Low Duration Bond Fund and
Victory Floating Rate Fund may help provide income while managing risks.
> The Victory INCORE Low Duration Bond Fund seeks to provide a high level of current income while preserving capital.
> The Victory Floating Rate Fund offers potentially higher yields and some protection from rising interest rates, thanks to yields that adjust periodically, although it does carry a slightly higher risk profile.
> Combined, these two funds may be part of a solution that helps investors balance their need for current income with the risks inherent to a rising rate environment.
Risk and return for combinations of the Victory INCORE Low Duration Bond Fund (RLDAX) and Victory Floating Rate Fund (RSFLX)
JANUARY 1, 2010 - JUNE 30, 2018 (CLASS A SHARES)
Performance quoted represents past performance and does not guarantee future results. The performance quoted does not reflect the current maximum sales charge. If a sales load were included, the performance stated above would be lower. Indexes are unmanaged and you cannot invest in an index. Index performance assumes the reinvestment of dividends paid on the stocks constituting the index and does not reflect any fees, costs, or expenses. Asset allocation models and diversification do not promise any level of performance or guarantee against loss of principal.
1. Standard Deviation is a measure of the portfolio’s total-return volatility over the last three years. A higher standard deviation indicates greater historical volatility.
2. Sharpe Ratio is a statistical measurement of the risk-adjusted performance of the portfolio. The ratio is calculated by dividing a portfolio’s excess return over the risk-free rate (generally a 3-month T-bill) by the standard deviation of its excess returns. This approximates a portfolio’s reward per unit of risk.
Performance Average Annual Total Returns (as of 6/30/2018)
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Performance quoted represents past performance and does not guarantee future results. Investment return and principal value will fluctuate, so shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. Performance current to the most recent month-end is available at www.vcm.com. The Victory Floating Rate Fund total gross/net annual operating expense ratio as of the most current prospectus is as follows: Class A Share is 1.11%/1.10% and Class Y Share is 0.88%/0.78%. The Victory INCORE Low Duration Bond Fund total gross/net annual operating expense ratio as of the most current prospectus is as follows: Class A Share is 0.89%/0.85% and Class Y Share is 0.63%/0.62%. Please read the prospectus carefully for more information on sales charges as they do not apply in all cases and if applied are reduced for larger purchases. Any sales charges are in addition to the Fund's fees and expenses as detailed in the Fund's most current prospectus. Total return figures reflect an expense limitation in effect during the periods shown; without such limitation, the performance shown would have been lower. Performance results assume the reinvestment of dividends and capital gains.
The Adviser has contractually agreed to waive a portion of its management fee and/or reimburse certain expenses through at least April 10, 2019. The Adviser is permitted to recoup fees waived/expenses reimbursed for up to 3 years after the fiscal year in which the waiver/reimbursement took place, subject to certain limitations. Please read the prospectus for details.
Class Y shares of the Fund are only available to investors that meet certain eligibility requirements.
Returns are average annual total returns, except those for periods of less than one year, which
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An investor should consider the fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information about the fund can be found in the fund’s prospectus, or, if applicable, the summary prospectus. To obtain a copy, visit www.vcm.com. Read the prospectus carefully before investing.
All investing involves risk, including potential loss of principal. There is no guarantee that the Fund will achieve its objective.
Bond funds are subject to interest rate risk, credit risk, and prepayment risk. When interest rates rise, bond prices generally fall, and when interest rates fall, bond prices generally rise. Currently, interest rates are at relatively low levels. Please keep in mind that in this kind of environment, the risk that bond prices may fall when interest rates rise is potentially greater and the risk that bond prices may fall is potentially greater. The values of mortgage-backed securities depend on the credit quality and adequacy of the underlying assets or collateral and may be highly volatile. Derivative transactions can create leverage and may be highly volatile. It is possible that a derivative transaction will result in a loss greater than the principal amount invested and the Fund may not be able to close out a derivative transaction at a favorable time or price. Securities with floating interest rates are less sensitive to interest rate changes but may decline in value if their interest rates do not rise as much as interest rates in general. High yield bond investing includes special risks. Investments in lower-rated and unrated debt investments are subject to a greater loss of principal and interest than investments in higher-rated investments. Floating rate investments issued in connection with leveraged transactions are subject to greater credit risk than many other investments. In certain circumstances, a lack of a ready market may make it difficult for the Fund to purchase or sell particular investments within a reasonable time and/or at a fair price.
The Funds are distributed by Victory Capital Advisers, Inc. (“VCA”), member FINRA and SIPC. Victory Capital Management Inc., an affiliate of VCA, is the investment advisor to the Funds and receives
a fee from the Funds for its services. Integrity Asset Management is is a Victory Capital investment franchise.
NOT A DEPOSIT • NOT FDIC OR NCUA INSURED • MAY LOSE VALUE • NO BANK OR CREDIT
©2018 Victory Capital Management Inc.
V18.008 // 2Q 2018 VCM Case for FRF and LDRSM