The January issue of our Bond Fund Intelligence, which will be sent to subscribers Wednesday morning, features the stories, "Top Stories & Funds of '24: Short-Term & High-Yield," which features the top BFI stories and funds from 2024, and "Worldwide BF Assets Jump to $14.1 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 fell in December 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, and join us for our upcoming Bond Fund Symposium, which is March 27-28 in Newport Beach, Calif.)
BFI's "Top Stories" article states, "After a nice start to the year, bond funds saw losses in October and December, and they ended up underperforming money funds in 2024. It was the mirror opposite of 2023, when they had an ugly start but staged a nice comeback in late 2023. (This followed a brutal 2022.) Bond assets were up slightly in 2024 after a flat 2023. They rose by just $128.1 billion, or 4.7%, to $2.626 trillion, according to our BFI XLS. Bond ETFs rose $99.6B (9.2%) to $1.179 trillion.
It continues, "According to ICI's broader fund asset series, bond funds saw assets grow by $379 billion YTD in 2024 through 11/30/24, after seeing outflows of $25.9B for the same period in 2023. ICI's asset series stood at $5.124 trillion as of Nov. 30, 2024, up $515.2 billion, or 11.2%, from a year earlier. Bond ETFs totaled $1.179 trillion on 11/30/24, up $99.6 billion, or 9.2%, over 12 months."
Our "Worldwide" article states, "Bond fund assets worldwide increased in the latest quarter to $14.14 trillion, led higher by the four largest bond fund markets -- the U.S., Luxembourg, Ireland and China. We review the ICI's 'Worldwide Regulated Open-End Fund Assets and Flows, Third Quarter 2024' release and statistics below."
It continues, "ICI's report says, 'Worldwide regulated open-end fund assets increased 6.8% to $74.95 trillion at the end of the third quarter of 2024.... 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 Retreat, Yields Mixed in Dec.," explains, "Bond fund returns were lower in December after rise in November. Our BFI Total Index fell 0.83% over 1-month but rose 3.92% over 12 months. (Money funds rose 5.08% over 1-year as measured by our Crane 100 Index.) The BFI 100 decreased 1.05% in Dec. but rose 3.44% over 12 mos. Our BFI Conservative Ultra-Short Index was up 0.32% over 1-month and 5.44% for 1-year; Ultra-Shorts rose 0.39% and 5.87%. Short-Term returned 0.06% and 5.15%, and Intm-Term fell 1.47% in Dec. and rose 2.41%. BFI's Long-Term Index was down 2.09% but up 1.69%. High Yield returned -0.33% in Dec. and 7.37% over 12 mos.
A second News brief, "A Release Says, 'Schwab Asset Management to Launch the Schwab Core Bond ETF.' It says, 'Schwab Asset Management … announced the launch of the Schwab Core Bond ETF (SCCR). It's the business's second actively managed fixed income ETF after the launch in August 2024 of the Schwab Ultra-Short Income ETF (SCUS).'"
Our next News brief, "Morningstar on 'How the Largest Bond Funds Did in 2024.' They write, 'For the most widely held bond funds in 2024, taking on riskier bonds was a winning strategy. Meanwhile, funds focused on longer-term, interest-rate-sensitive securities got hammered. US companies rush to bond market in fundraising flurry.'"
A BFI sidebar, "Vanguard Launches Short ETF," states, "A press release titled, 'Vanguard Expands Fixed Income Lineup with New Actively Managed Bond ETF,' tells us, 'Vanguard ... announced plans to introduce Vanguard Short Duration Bond ETF (VSDB), an active fixed income ETF that will be managed by Vanguard Fixed Income Group. Vanguard intends to launch the ETF in early April of this year.'"
Finally, another sidebar, "Bond Funds Trail Inflation," says, "Morningstar writes, 'Bond Funds Hurt By Rising Yields in Q4 2024.' The article states, 'The fourth quarter of 2024 proved tough going for most bond investors and led to lackluster results for the whole year, made worse when adjusted for inflation. As recently as mid-September, the investment-grade bond market as represented by the Morningstar US Core Bond Index was on pace for a calendar-year return of more than 5% for the second year in a row. But then worries about the stickiness of inflation combined with a more cautious rate-cutting stance from the Federal Reserve led to rising yields and falling prices for intermediate and long-term bonds.'"
