The Madison Core Bond Fund's Class I shares posted a 1.11% return in the fourth quarter, narrowly exceeding its benchmark's 1.10% by a single basis point. This performance was achieved amidst a complex economic backdrop, characterized by significant monetary policy adjustments from the Federal Reserve and ongoing market dynamics in corporate bonds and Treasuries.
During the quarter, the Federal Reserve twice lowered interest rates, setting the federal funds target range at 3.50% to 3.75%. Despite this easing of monetary policy, the broader economic situation remained mixed. A notable factor contributing to market uncertainty during this period was a government shutdown.
In terms of specific asset classes, corporate bonds demonstrated relative stability when compared to Treasuries. However, the spreads between these two asset types experienced a modest widening. The interplay of these factors shaped the fund's overall performance and investment decisions during the quarter.
The Madison Core Bond Fund's slight outperformance highlights its ability to navigate a challenging and evolving financial landscape. The fund's strategic positioning, especially concerning interest rate movements and corporate bond market behavior, was crucial in delivering positive returns for its Class I shareholders.