The July issue of our Bond Fund Intelligence, which as sent to subscribers Tuesday morning, features the stories, "Worldwide BF Assets Jump to $14.3 Trillion, Led by US, Brazil," which covers ICI's latest data on global bond fund markets; and "Vanguard Asks, 'Is the Agg Enough?' Q&A w/'Mr. Agg'," which looks at a recent discussion of bond market benchmarks. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns were up in June while yields were lower. 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.)
BFI's lead article states, "Bond fund assets worldwide increased in the latest quarter to $14.302 trillion, led higher by the U.S., Brazil, Luxembourg and Ireland. We review the ICI’s 'Worldwide Regulated Open-End Fund Assets and Flows, First Quarter 2025' release and statistics below."
It continues, "ICI's report says, 'Worldwide regulated open-end fund assets, excluding assets in funds of funds, increased 0.8% to $74.45 trillion at the end of the first quarter of 2025.... The Investment Company Institute compiles worldwide regulated open-end fund statistics on behalf of the International Investment Funds Association (IIFA).'"
Our "Agg" article states, "Vanguard posted an article which asks, 'Is the Agg enough for your fixed income portfolio?' They reply, 'Some advisors believe that the Bloomberg U.S. Aggregate Index, or the Agg, is the definitive proxy for the U.S. taxable bond market, just as the Standard & Poor's 500 Index serves as a proxy for U.S. stocks. However, unlike the stock indexes, the Agg ... only offers partial exposure to the U.S. bond market. And remember that the U.S. bond market makes up less than 40% of the global fixed income market, which means that clients who track the Agg in their fixed income allocations miss out on a wider playing field.'"
We write, "The piece continues, 'A simple solution: Active products that can invest beyond the Agg, like the Core-Plus Bond ETF (VPLS). Vanguard Core Bond ETF (VCRB) can invest beyond the Agg, but with a more conservative mandate than Core-Plus products. Both VPLS and VCRB launched late in 2023. More narrowly focused index-based ETFs can target areas such as mortgage-backed securities, inflation-protected securities, or corporates. Additionally, international bond ETFs can access the investment-grade non-U.S. sovereign, corporate, and emerging markets.'"
Our first News brief, "Returns Jump, Yields Lower in June," says, "Bond fund returns were higher in June after being mixed in May. Our BFI Total Index rose 1.13% over 1-month and rose 5.69% over 12 months. (Money funds rose 4.66% over 1-year as measured by our Crane 100 Index.) The BFI 100 increased 1.31% in June and rose 6.53% over 12 mos. Our BFI Conservative Ultra-Short Index was up 0.46% over 1-month and 5.13% for 1-year; Ultra-Shorts rose 0.50% and 5.54%. Short-Term returned 0.82% and 6.58%, and Intm-Term rose 1.48% in June and 6.41% over 12 mos. BFI's Long-Term Index was up 1.83% and up 6.16%. High Yield returned 1.45% in June and 8.18% over 12 mos."
A second News brief, "MarketWatch Says, 'Bond-ETF Inflows Surge as Demand Returns for Treasurys.' They write, 'Demand for bonds has surged in the past week in the exchange-traded-fund market, as U.S. government debt reversed outflows. Net inflows into fixed-income ETFs soared 70% in the week through Wednesday to $5.3 billion..., according to a CreditSights note Thursday. U.S. Treasury ETFs attracted $2 billion after losing $2.1 billion the week before — with the inflow coming in at almost 50% more than the 13-week average, the note shows.'"
Our next News brief, "Morningstar on 'How the Largest Bond Funds Did in Q2 2025' They comment, 'The largest active bond funds were generally strong in the second quarter, as much of the bond market registered positive returns amid widespread volatility. Out of the 10 most-widely held active bond funds, three landed in the top quarter of their categories during the quarter. The $52.5 billion Vanguard Short-Term Investment Grade Fund (VFSIX) ranked in the 11th percentile with a 1.9% return. Four of the largest active bond funds placed in the bottom half of their categories in the second quarter, with the worst-performing being the $44 billion PIMCO Total Return Fund (PTTRX).'"
A BFI sidebar, "ETF.com on Ultra-Short ETFs," tells us, "ETF.com writes 'Seeking Safety: Ultra Short-Term Bond ETFs Quietly Surge.' The brief tells us, 'Ultra-short-term bond ETFs are quietly having a breakout year. Two of the largest—the iShares 0-3 Month Treasury Bond ETF (SGOV) and the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL)—rank among the top U.S.-listed ETFs by year-to-date inflows, as investors flock to safe havens amid economic uncertainty and volatile markets.'"
Finally, another sidebar, "More Vanguard ETFs Go Live," says, "A press release titled, 'Vanguard Launches Three New ETFs Focused on U.S. Government Bonds,' tells us, 'Vanguard ... launched Vanguard Government Securities Active ETF (VGVT), an actively managed ETF, and two index ETFs, Vanguard Total Treasury ETF (VTG) and Vanguard Total Inflation-Protected Securities ETF (VTP), all managed by Vanguard Fixed Income Group.'"
