(MONEY Magazine) – Is it ever worth paying a sales charge for a bond fund? Some investors would say no. But there's at least one fixed-income portfolio that seems to justify its 4.5% up-front charge: $210 million FPA New Income.

Consider these credentials: New Income is the only bond portfolio you can buy that hasn't had a single down year since 1974--it even eked out a 1.5% profit in the bond rout of 1994, when the average taxable bond portfolio fell 3.2%. Since 1984, when Robert Rodriguez, 46, took over as manager, it has notched an average annual return of 12.6%, vs. 11.6% for the Lehman Bros. aggregate bond index. The fund pays a higher than average yield of 6.1% and, after adjusting for its load, FPA has delivered annualized returns of 11.2% over the past five years, vs. 10.8% for its peers, with about half the volatility. Have we got your attention?

Rodriguez scours every nook and cranny of the fixed-income market to find undervalued securities--including a 6% stake in derivatives that he bought after their prices plunged. "I run scared most of the time," he says. "If you make a single mistake in bonds, it takes a long time to correct it. So our philosophy has been to win by not losing."

He's being especially cautious now. Unable to find many bargains in this year's powerful bond rally, Rodriguez is holding almost 23% cash. To prepare for possible rate increases, he has trimmed the fund's duration (a measure of interest-rate sensitivity) to a conservative three years, vs. 6.5 years for the average corporate bond fund. Says Steve Savage, editor of Value Line Mutual Fund Survey: "New Income can produce above-average returns in almost any market."

--Prashanta Misra