In the third quarter of 2025, the Touchstone Active Bond Fund (TOBAX) recorded a notable performance, exceeding the returns of its benchmark, the Bloomberg U.S. Aggregate Bond Index. This success was driven by the fund's strategic decisions in asset allocation and its emphasis on credit investments. Looking ahead to 2026, the economic landscape appears promising, with supportive policies such as full expensing for manufacturing facilities, research and development, and equipment investments beginning to yield positive results.
The Touchstone Active Bond Fund (TOBAX) is meticulously crafted to achieve maximum total return, employing a rigorous selection process to build a diverse portfolio. Its active management philosophy focuses on identifying and leveraging market inefficiencies. The fund's ability to tactically adjust its duration positions it favorably to manage and benefit from the dynamic nature of interest rate volatility, a critical factor in the bond market.
A key element of TOBAX's strategy involves maintaining a modest overweight risk posture. This approach allows the fund managers to selectively increase exposure to riskier assets when market conditions present attractive opportunities, thereby enhancing potential returns while carefully managing downside exposure. This proactive management style distinguishes it from passively managed funds.
The fund's positive outlook for 2026 is also underpinned by broader economic trends. The implementation of full expensing for manufacturing structures, research and development, and equipment investment is expected to stimulate economic growth and corporate profitability. These policy measures are designed to encourage capital expenditure and innovation, which can positively impact the bond market by fostering a stable and growing economic environment.
The Touchstone Active Bond Fund’s consistent outperformance and its adaptive investment strategy underscore its commitment to delivering value to investors. By continuously monitoring the economic environment and adapting to new developments, the fund aims to maintain its competitive edge and achieve its long-term financial objectives. Its blend of strategic allocation, credit focus, and dynamic duration management positions it as a resilient option in the evolving bond market landscape.