The April issue of our Bond Fund Intelligence, which will be sent to subscribers Friday morning, features the stories, "Worldwide BF Assets Jump to $12.9 Trillion, Led by U.S," which ICI's latest collection of global bond fund marketplace statistics and "Bond Fund Symposium '24: Spreads Tight, Yield Attractive," which quotes from our recent fixed-income fund conference. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns jumped in March while yields were mixed. 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 "Worldwide BF" piece states, "Bond fund assets worldwide increased in the latest quarter to $12.9 trillion, led higher by four of the largest bond fund markets -- the U.S., Luxembourg, Ireland and China. We review the ICI's 'Worldwide Open-End Fund Assets and Flows, Fourth Quarter 2023' release and statistics below."
The piece continues, "ICI's report says, 'Worldwide regulated open-end fund assets increased 8.6 percent to $68.85 trillion at the end of the fourth quarter of 2023.... The Investment Company Institute compiles worldwide regulated open-end fund statistics on behalf of the International Investment Funds Association (IIFA).'"
Our "Symposium" article states, "We recently hosted our latest Crane's Bond Fund Symposium in Philadelphia. Below, we quote from the 'Long-Term & Core Bond Fund Issues,' which featured Invesco's Matthew Brill, J.P. Morgan A.M.'s Priya Misra and Ramirez A.M.'s Samuel Ramirez, Jr. (Thanks to those who supported BFS. Crane Data subscribers may access the recordings and conference materials at the bottom of our 'Content' page or via our 'Bond Fund Symposium 2024 Download Center.')"
It states: "Asked about the biggest issues for core bond funds, Brill comments, 'The landscape out the curve is probably similar to what you see on the front end. [E]ssentially, it's a question of what matters more. Is it spread or is it yield? So that's the dynamic that we are dealing with every day.... [W]e've been overweight corporate credit. We think there's some attractive value there. We've been trying to tell people: 'step out the curve.' If you like six months, you’ve got to like six years. That's been our motto for almost a year now, and it's been ... well-received.'"
Our first News brief, "Returns Higher, Yields Mixed in March," says, "Bond fund returns rose after falling in February, while yields rose slightly last month. Our BFI Total Index rose 0.57% over 1-month and 4.73% over 12 months. The BFI 100 increased 0.22% in March and 4.07% over 12 mos. Our BFI Conservative Ultra-Short Index was up 0.42% over 1-month and 5.64% for 1-year; Ultra-Shorts rose 0.49% and 6.13%. Short-Term gained 0.50% and 4.78%, and Intm-Term fell 0.20% in March but rose 2.69% over 1-year. BFI's Long-Term Index fell 0.46% but rose 2.51%. High Yield rose 0.87% in March and 9.80% over 12 months."
A second News brief, "Morningstar on 'How the Largest Bond Funds Did Last Quarter," states, "With Federal Reserve interest rate cuts pushed to later in 2024, the first quarter was mixed for the largest bond funds. The funds with the greatest sensitivity to changes in interest rates lost ground as bond prices fell in response to expectations that the Fed would hold rates higher for longer. However, funds that emphasized corporate bonds and other corners of the credit markets benefitted from the economy's continued strength. For investors in the most widely held funds, returns were often subpar."
Our next News brief, "ICI Expense Survey: BFs Average 0.37%," explains, "ICI published the release, 'Mutual Fund Expense Ratios Have Declined Substantially over the Past 27 Years,' along with the report, 'Trends in the Expenses and Fees of Funds, 2023.' The full report tells us, 'On an asset-weighted basis, average expense ratios incurred by mutual fund investors have fallen substantially over the past 27 years. From 1996 to 2023, average equity mutual fund expense ratios dropped by 60% and average bond mutual fund expense ratios dropped by 56%.... The average expense ratio for index bond ETFs remained unchanged at 0.11% in 2023.... Average expense ratios of hybrid and bond mutual funds, as well as money market funds, have also declined meaningfully since 1996.' A table, shows bond fund averages falling from 0.84% to 0.37% from 1996 through 2023."
A BFI sidebar, "MStar on Core Bond Funds," says, "Morningstar writes on the '5 Top-Performing Core Bond Funds.' They state, 'Bond fund investors continue to experience a seesaw market. After a rally in late 2023, 2024 has started on a sour note, with many funds posting losses. Still, their declines are minor compared with 2022′s record-setting ones.'"
Finally, another sidebar, "Barron's on 5 Funds for Cuts" comments, "Barron's lists, ‘5 Funds to Prepare for Fed Rate Cuts, Whenever the Time Comes.' The article says, 'Short-term yields are now in the 5% range, drawing many fund investors to the front end of the yield curve. Money-market fund assets recently totaled about $6.5 trillion, continuing their strong growth, according to Crane Data. Nevertheless, it's a good time to consider funds that hold longer-term bonds as a way to diversify, position for an eventual Federal Reserve rate cut, and even gird against a recession.'"
