Jeffrey Gundlach, founder of Los Angeles-based DoubleLine Capital LP, is one of the few managers of an intermediate bond fund who has topped the Vanguard index fund this year. His $720 million DoubleLine Core Fixed Income Fund returned 9.8 percent in 2011, Bloomberg data show. The fund had 17 percent of its assets in Treasuries as of Aug. 31, Morningstar data show.
Gundlach managed the TCW Total Return Fund from 1993 to 2009. It was the top-performing intermediate bond fund for the 15 years ended Nov. 30, 2009, with an annual return of 8.3 percent, according to Morningstar.
While acknowledging that Treasuries have been winners this year, Colin Lundgren of Columbia Management said the trend may not hold.
"For Treasuries to continue to outperform, we will need to see more bad news," said Lundgren, who expects corporate bonds to outpace Treasuries over the next 6 to 12 months.
Investors in the Vanguard Intermediate Bond Index Fund need to temper their expectations, said David Falkof, a Morningstar analyst who follows the fund.
"If rates rise, this fund will not fare as well as its peers," he said in a telephone interview.