Questions?

1-800-582-6757

Monday - Friday
9 a.m. - 6 p.m. EST

Send us an email

Domini Social Bond Fund ®

Fund Information

$11.46
Daily Price (NAV)
as of 06/29/2016
Symbol DSBIX
Daily NAV Change $0.00 (0.00%)

Key Documents

Overview

Institutional Shares Overview​

Institutional shares are available to qualified endowments, foundations, religious organizations, nonprofit entities, individuals and certain corporate or similar institutions that meet the minimum investment requirements.

Investment Objective

The Fund seeks to provide its shareholders with a high level of current income and total return.  

Investment Strategy

As a primary strategy, the Fund’s investment approach incorporates Domini’s social and environmental standards. 

The Fund normally invests at least 80% of its assets in investment-grade fixed-income securities, including government, corporate, mortgage-backed and asset-backed securities, and U.S. dollar-denominated bonds issued by non-U.S. entities.  The Fund maintains an effective duration within two years (plus or minus) of the portfolio duration of the securities comprising the Barclays U.S. Aggregate Bond Index­­.

Domini evaluates potential corporate debt instruments against social and environmental standards based on:

  • the businesses in which the issuer engages
  • the quality of its relations with key stakeholders, including communities, customers, ecosystems, employees, investors, and suppliers

With respect to noncorporate debt instruments, the Fund seeks to focus on three key themes:

  • Increasing access to capital for those historically underserved by the mainstream financial community
  • Creating public goods for those most in need
  • Filling capital gaps left by current financial practice

In particular, the Fund seeks noncorporate debt instruments that support:

  • Affordable housing
  • Small business development
  • Community revitalization
  • Rural Development
  • Education
  • The environment
  • Healthcare

Domini may determine that a security is eligible for investment even if its profile reflects a mixture of positive and negative social and environmental characteristics. Please see Domini’s Global Investment Standards for further details.

Management

The Fund is managed through a two-step process designed to capitalize on the strengths of Domini Social Investments and Wellington Management Company. Domini sets social and environmental guidelines and objectives for each asset class, and develops an approved universe of companies, and Wellington utilizes proprietary analytical tools to manage the portfolio. Wellington Management Company has been serving as submanager of the Fund since January 7, 2015.  Campe Goodman, CFA, is primarily responsible for the day-to-day management of the Fund, assisted by other members of Wellington Management's US broad market team.

Investor Profile

Who Should Invest

  • The Institutional share class of the Domini Social Bond Fund is available to investors that meet the minimum investment requirements, have been approved by the distributor, and fall within the following categories: endowments, foundations, religious organizations and other nonprofit entities, individuals, retirement plan sponsors, family office clients, private trusts, certain corporate or similar institutions, or omnibus accounts maintained by financial intermediaries.**
  • Investors seeking a high level of current income and total return
  • Investors seeking exposure to the bond market to diversify their portfolio
  • Investors who wish to support the Fund's responsible investment standards 

Who Should Not Invest

  • Investors unwilling or unable to accept fluctuations in share price due to risks associated with the bond market

Performance

Institutional Shares Performance
 

Month-End Returns as of 5/31/16
YTD1 Yr3 Yr*5 Yr*10 Yr*Since Inception (6/1/00)*
DSBIX4.02%3.23%2.20%2.23%3.96%4.44%
BIA2.52%2.42%2.43%2.69%4.55%5.10%
Barclays U.S. Aggregate3.45%2.99%2.91%3.33%4.97%5.47%

Quarter-End Returns as of 3/31/16
YTD1 Yr3 Yr*5 Yr*10 Yr*Since Inception (6/1/00)*
DSBIX3.21%1.93%1.69%2.49%3.87%4.43%
BIA2.31%2.20%2.14%3.11%4.52%5.15%
Barclays U.S. Aggregate3.03%1.96%2.50%3.78%4.90%5.51%

Calendar Year Returns
DSBIXBIABUSA
2015-0.17%1.21%0.55%
20143.87%4.12%
2013-1.76%-1.02%
20122.89%3.56%
20115.85%5.97%
20104.74%6.15%
20095.77%6.46%
20085.69%4.86%
20076.00%7.02%
20063.38%4.58%
20051.56%2.01%
20042.81%3.74%
20032.31%3.81%
20028.85%9.51%
20018.34%8.67%

Quarterly Returns
DSBIXBIABUSA
1st Qtr 20163.21%2.31%3.03%
4th Qtr 2015-0.53%-0.51%-0.57%
3rd Qtr 20151.32%1.08%1.23%
2nd Qtr 2015-2.00%-0.67%-1.68%
1st Qtr 20151.08%1.32%1.61%
4th Qtr 20141.06%1.20%
3rd Qtr 2014-0.02%0.03%
2nd Qtr 20141.43%1.62%
1st Qtr 20141.36%1.20%
4th Qtr 2013-0.22%-0.14%
3rd Qtr 20130.66% 0.76%
2nd Qtr 2013-2.16%-1.78%
1st Qtr 2013-0.03%0.15%

*Average annual total returns.

Institutional shares were not offered prior to 11/30/11. All performance information for time periods beginning prior to that date is the performance of the Investor shares, which has not been adjusted to reflect the lower expenses of the Institutional shares.

Annual Expense Ratio: Gross: 1.07% / Net: 0.65%. Per current prospectus. Domini has contractually agreed to cap Institutional share expenses to not exceed 0.65% until 11/30/16, subject to earlier modification by the Fund’s Board of Trustees. See prospectus for details. The Funds’ performance would have been lower had these fees not been waived

Holdings

Ten Largest Holdings as of 5/31/16
ISSUER% OF PORTFOLIO
Fannie Mae TBA 30 YR (3.0% due 6/13/2046)5.5%
Fannie Mae TBA 30 YR (3.5% due 6/13/2046)3.7%
Fannie Mae (1.5% due 6/22/2020)3.3%
Fannie Mae (5.625% due 7/15/2037)2.6%
Fannie Mae TBA 30 YR (4.0% due 6/13/2046)2.4%
Fannie Mae pool AS6408 (3.5% 1/1/2046)1.7%
Federal Home Loan PC pool G08698 (3.5% due 3/1/2046)1.6%
Fannie Mae pool AM7067 (3.11% due 1/1/2021)1.3%
Ginnie Mae II TBA 30 YR (4.0% due 6/21/2046)1.3%
Ginnie Mae II pool MA3453 (3.0% due 2/20/2046)1.3%
TOTAL24.6%
Sector Weightings as of 3/31/16
SECTOR% OF PORTFOLIO
Mortgage Backed Securities63.5%
Investment Grade Credit31.6%
Bank Loans7.2%
Commercial Mortgage Backed Securities6.1%
U.S. Govt Agencies3.8%
High Yield Credit2.8%
Tax Exempt Municipal0.3%
Asset Backed Securities0.0%
Developed Non U.S. Dollar Denom.-1.3%
Cash & Cash Equivalents-14.1%
Total100%

View the most recent quarterly holdings report filed with the Securities and Exchange Commission.

Characteristics

All data as of 3/31/2016 unless otherwise noted.

Portfolio Composition by Credit Quality1

Aaa 5.24%
Aa 65.12%
A 7.57%
Baa 21.88%
Ba 7.22%
B 2.94%
Below B 0.16%
Cash & Cash Offsets2 -14.09%
Not Rated3 3.95%

Portfolio Statistics

  DSBFX BUSA4
Avg. Effective Maturity (Yrs.) 8.31 7.31
Total Number of Holdings5 343 9,704
 
1. Credit-quality ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest). Credit-quality ratings for each issue are obtained from Moody's Investors Service (Moody's) and Standard & Poor's (S&P). When two bonds receive different ratings from Moody’s and S&P, we take the lower of the two ratings into consideration.  Ratings do not apply to the Fund itself or to Fund shares. Ratings may change.
2. May include Cash, Cash Equivalents (defined as issued with 1 year to maturity), Trade Receivables/Payables as of the trade date (not settlement date), STIF Instruments, and derivative cash offsets.
3. Securities that are not rated by either agency are listed as "Not Rated."
4. Barclays U.S. Aggregate Index
5. Excludes currency forwards, currency futures, currency options and cash offsets.
 

Commentary

Institutional Shares Performance Commentary

The Fund is managed through a two-step process designed to capitalize on the strengths of Domini Social Investments and Wellington Management Company. Domini sets social and environmental guidelines and objectives for each asset class, and develops an approved universe of companies, and Wellington utilizes proprietary analytical tools to manage the portfolio. Wellington Management Company has been serving as submanager of the Fund since January 7, 2015.

Dowload Commentary as a PDF.

Total Returns as of March 31, 2016

  Jan
2016
Feb
2016
March
2016
1st Qtr
2016
YTD One
Year
Three
Year*
Five
Year*
Ten
Year*
Since Inception
(6/1/00)*
DSBIX 1.39% 0.49% 1.30% 3.21% 3.21% 1.93% 1.69% 2.49% 3.87% 4.43%
BIA 1.25% 0.45% 0.58% 2.31% 2.31% 2.20% 2.14% 3.11% 4.52% 5.15%
BUSA 1.38% 0.71% 0.92% 3.03% 3.03% 1.96% 2.50% 3.78% 4.90% 5.51%

The Fund's Institutional shares outperformed the Barclays U.S. Aggregate Bond Index for the first quarter, returning 3.21% vs. the benchmark's 3.03% performance.

Market Overview

The year began with global volatility, with most asset classes experiencing sharp declines before markedly rebounding in the second half of the period. In January, oil prices hit a 12-year low of $26/barrel, but recovered to nearly $40 by quarter end. Concerns over slowing growth in China, and the efficacy of central bank monetary policies sparked a broad sell-off in credit markets. Following the European central banks, the Bank of Japan (BoJ) introduced negative interest rates for the first time as volatility and instability in financial markets threatened to tip the country back into deflation. Sweden’s Riksbank cut interest rates deeper into negative territory. The global banking sector was hit particularly hard amid concerns about whether banks can be profitable in an environment of negative interest rates. 
 
Markets reversed course in mid-February as the major central banks adopted less aggressive stances to ease market risk. China’s central bank resumed its easing cycle with a surprise cut in the banks’ reserve-requirement ratio and the ECB announced significant easing measures. The Federal Reserve surprisingly indicated an even slower tightening path in the future, paring back forecasts for interest rate increases in 2016, citing global uncertainties. The rebound in crude oil prices further supported the rally in global financial markets in the second half of the quarter. 
 
U.S. economic data was relatively strong despite increasing concerns about the growth outlook. The labor market showed resilience in the wake of tightening financial conditions, as evidenced by consistently low jobless claims and solid job growth. The manufacturing sector showed signs of stabilizing and the housing market continued to post healthy price gains. However, activity in the services sector slowed and consumers cautiously pulled back on spending amid the turbulence in equity markets and weaker global conditions. Low oil prices dampened headline inflation, while core prices continued to rise. Investment grade credit outperformed on an excess return basis for the quarter. Financials underperformed industrials and utilities as negative policy rates and the prospect of weaker global growth raised concerns about banks’ interest margins and earnings capacity.
 

Performance Commentary

  • Additive to Relative Performance: Allocations to Mortgage-Backed Securities, bank loans, and investment grade credit; Duration/yield curve positioning.
  • Primary Detractor from Relative Performance: Inflation positioning.

U.S. interest rates declined sharply, primarily in the first half of the quarter, as concerns about the Chinese economy and falling oil prices pushed investors into safe haven government bonds. Wellington Management maintained modest opportunistic duration positions during the quarter, which had a positive impact on performance. 

Wellington held a neutral to overweight position in investment grade corporate bonds for the Fund, favoring U.S. financials and, in particular, large money center banks. Our credit positioning was a positive contributor to relative results overall. Favorable security selection within industrials and the portfolio’s use of credit derivatives more than offset the negative contribution from an overweight to, and security selection within, financials. 
 
Overall, Agency Mortgage-Backed Securities (MBS) posted positive total returns of 1.98% for the quarter, slightly underperforming duration-equivalent Treasuries. Though MBS weathered global market volatility better than other spread sectors, the rally in rates through mid-February triggered concerns about increases in prepayments and mortgage supply. The Fund held an overweight to Agency MBS during the quarter, and continued to favor agency Collateralized Mortgage Obligations and FNMA Delegated Underwriting and Servicing (DUS) bonds where the underlying collateral is multi-family housing for lower-income areas. FNMA DUS bonds outperformed on an excess return basis as the sector benefitted from the broader credit rally. The Fund also favored agency debt linked to residential mortgages based on an improving housing market, and these securities outperformed duration-equivalent Treasuries, primarily due to income. These allocations benefitted relative performance. 
 
The Fund continued to favor bank loans based on attractive valuations and low default expectations, and maintained a small allocation to BB-rated high yield bonds. The bank loan sector posted its best quarterly return in a year, benefitting Fund performance. 
 
The Fund’s inflation positioning, based on expectations of rising inflation and a belief that the market was pricing in unrealistically low inflation assumptions over the longer term, had a negative impact on performance. The Fund’s small allocation to non-U.S. dollar denominated debt also detracted from performance. 
 

Community & Environmental Impact

The Fund seeks to play a positive role in the economic development of communities, focusing on key themes, including affordable housing, education and climate mitigation. In the fourth quarter, securities Domini characterizes as “high impact” represented 15.5% of the Fund’s total portfolio, including the following examples.

Public Health

Three additions to the portfolio this quarter finance nonprofits dedicated to providing important medical and research services to the community.

Boston Medical Center is a nonprofit medical center with a majority of patients from medically underserved populations. Approximately 70% of its patients are members of racial and ethnic minorities. The Center maintains very strong access to healthcare programs, including network affiliations with community health centers throughout the Boston area. 
 
The Mayo Clinic is a nonprofit hospital with widely recognized medical education and research facilities. The Clinic provides access to a medical information sharing system through its Mayo Clinic Care Network, which allows 30 health care organizations to have direct access to Mayo Clinic expertise for complex medical conditions. 
 
Vanderbilt University Medical Center is the largest research, teaching, and patient care health system in Tennessee. The Center launched a personalized cancer decision support tool, “My Cancer Genome,” to help healthcare providers track the latest developments in cancer medicine and clinical trials. The tool averages 6,700 site visits/week worldwide from 186 countries. 

Making a Difference

The Fund seeks to play a positive role in the economic development of communities, focusing on key themes, including affordable housing, education and climate mitigation. In the fourth quarter of 2015, securities Domini characterizes as “high impact” represented 15.5% of the Fund’s total portfolio. 

Deepening our Impact – Green Bonds

Although our engagement work has historically focused on corporations, leveraging our rights as shareholders, we are also interested in opportunities to deepen the impact of the Domini Social Bond Fund through engagements with issuers and standard setters.  To date, these engagements have focused on green bonds, designed to finance projects and activities that address climate change or serve other environmentally beneficial purposes.

Policy on Firearms Manufacturers

Domini has a longstanding policy to avoid investment in the manufacturers of weapons, including military weapons and civilian firearms. This policy extends to firms that derive a significant percentage of revenues from the sale of firearms. We believe this industry is inherently damaging to society, due to the intersection between a particularly dangerous product and the extraordinary pressures to maximize profits and increase market share—pressures which are exponentially heightened for publicly traded companies. 

Domini Social Bond Fund Impact (Q4 2015)

In the fourth quarter, securities Domini characterizes as “high impact” represented 15.5% of the Fund’s total portfolio, including bonds to finance affordable housing and high quality healthcare to low-income and at-risk populations. The Fund also purchased a bond issued to finance solar and wind power generation facilities in the U.S. 

Bond Fund Standards

Fixed-income investments provide an important opportunity to create public goods, address a wide range of economic disparities in our society, and to fill certain capital gaps – funding needs that have often received insufficient attention from investors. We seek to address some of these disparities through the investments of the Domini Social Bond Fund, while simultaneously seeking to achieve competitive returns for our Fund’s investors.