The January issue of our Bond Fund Intelligence, which will be sent to subscribers Tuesday morning, features the stories, "Top Stories & Funds of '23: Big Asset Declines, Losses," which features the top BFI stories from 2023 and "Worldwide BF Assets Drop to $12.0 Trillion, Led by U.S," which recaps the latest statistics on bond fund markets outside the U.S. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns jumped again in December while yields plunged once more. We excerpt from the new issue below. (Contact us if you'd like to see our latest Bond Fund Intelligence and BFI XLS spreadsheet, or our Bond Fund Portfolio Holdings data.)
Our "Top Stories" piece states, "Bond funds staged a miraculous comeback in late 2023, after a brutal 2022 and an ugly start to the past year. Bond assets were flat in 2023 at $2.626 trillion, according to our BFI XLS, while bond ETFs rose to $1.047 trillion. The year began with the Fed hiking rates and ended with the market expecting cuts in 2024."
It continues: "According to ICI's broader fund asset series, bond funds saw asset outflows of $25.9 billion YTD in 2023 through 11/30/23, after seeing outflows of $488.5B for the same period in 2022. These followed two straight years of $500 billion plus, double-digit asset gains. ICI's asset series stood at $4.609 trillion as of Nov. 30, 2022, up $43.2 billion, or 0.9%, from a year earlier. Bond ETFs totaled $1.446 trillion on 11/30/23, up $183.2 billion, or 14.5%, over 12 months."
Our "Worldwide BF" article states, "Bond fund assets worldwide decreased sharply in the latest quarter to $12.0 trillion, led lower by the four largest bond fund markets -- the U.S., Luxembourg, Ireland and Brazil. We review the ICI's 'Worldwide Open-End Fund Assets and Flows, Third Quarter 2023' release and statistics below."
It states: "ICI's report says, 'Worldwide regulated open-end fund assets decreased 2.6% to $63.39 trillion at the end of the third quarter of 2023.... The Investment Company Institute compiles worldwide regulated open-end fund statistics on behalf of the International Investment Funds Association (IIFA).'"
Our first News brief, "Returns Jump Again, Yields Plunge in Dec.," states, "Bond fund returns had another big monthly jump while yields plummeted once more last month. Our BFI Total Index increased 2.52% over 1-month and 6.68% over 12 months. The BFI 100 rose 3.00% in Dec. and 6.72% in 2023. Our BFI Conservative Ultra-Short Index was up 0.72% over 1-month and 5.62% for 1-year; Ultra-Shorts rose 0.79% and 6.04%. Short-Term rose 1.50% and 5.69%, and Intm-Term increased 3.42% in Dec. and 5.89% over 1-year. BFI's Long-Term Index rose 4.24% and 6.70%. High Yield jumped 2.85% in Dec. and 11.17% in 2023."
A second News brief, "Morningstar on 'How the Largest Bond Funds Did In 2023.' Subtitled, ‘Dodge & Cox Income, PGIM Total Return lead, while Vanguard Short-Term Bond lags,’ the piece says, 'After two years of losses, investors in the largest bond funds have reason to cheer. Across the board, the most widely owned bond funds posted gains for 2023, avoiding what just a few months ago looked like an unprecedented third consecutive year in the red.'"
Our next News brief, "Reuters' 'US Bond Bulls Look to 2024 Fed Pivot to Sustain Searing Rally,' tells us, ‘As bonds emerge from a historic selloff, some investors expect better times in the U.S. fixed income market next year -- as long as the Federal Reserve's rate cuts play out as anticipated. A fourth-quarter rally saved bonds from an unprecedented third straight annual loss in 2023, following the worst-ever decline a year earlier.... Year-to-date, the Vanguard Total Bond Market Index Fund, with over $300 billion in assets, posted a 5.67% return, up from negative 13.16% last year. PIMCO's flagship $132 billion bond fund, the Income Fund, had year-to-date returns of 9.25% from minus 7.81% last year.'"
A BFI sidebar, "New Federated Bond ETF," says, "A press release entitled, 'Federated Hermes, Inc. launches Total Return Bond ETF,' tells us, 'Federated Hermes, Incorporated. (FHI) ... announced the launch of the Federated Hermes Total Return Bond ETF (FTRB) <b:>`_. The new actively managed ETF benefits from Federated Hermes' 50 years of experience managing fixed-income securities, a veteran portfolio management team and the advantages of an ETF structure.'"
Finally, another sidebar, "ICI Hits SEC Liquidity Props," comments, "A new ICI Viewpoint entitled, 'The SEC's Liquidity Proposal Is Arbitrary and Harmful to Investors,' tells us, 'Open-end long-term mutual funds have a long history of successfully managing liquidity, enabling them to meet shareholder redemptions in a timely manner while pursuing their investment objectives. Over the past four decades, 99.94% of these funds have met redemptions, including every single fund during the 2008 global financial crisis and the 2020 dash for cash.'"
