The December issue of our Bond Fund Intelligence, which was sent to subscribers Friday a.m., features the stories, "Outlook for 2026: Unanswered Questions, But Bonds Beckon," which reviews the outlooks for next year from Federated, Fidelity and Charles Schwab; and "Vanguard Debuts Core-Plus Bond ETF; New T. Rowe ETFs," which covers recent press releases on new bond ETFs. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns were higher again in November while yields moved 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.) (Note: There's still time to register for our "basic training" event, Money Fund University, which takes place next week, Dec. 18-19, in Pittsburgh! Attendees and subscribers may access the conference materials via our "Money Fund University 2025 Download Center.")
BFI's lead article states, "A Federated Hermes 'Insight,' 'Cautious Optimism for 2026,' quotes Robert Ostrowski, 'Fixed income markets enter the new year with a surplus of unanswered questions. To be fair, 2025 answered some. A year ago, we expected a repeat of the post-2016 election environment, with a combination of a dovish-leaning Federal Reserve in the short-term and uncertainty about the long-term success of the new administration’s policies resulting in further steepening of the US yield curve. It took longer to evolve than expected.'"
It continues, "The Global Fixed-Income CIO explains, 'Defying market expectations and growing political pressure, the Fed paused for nine months before eventually resuming interest rate cuts a year into the cycle. Gradually, tariff-driven uncertainty and resultant volatility gave way to investor consensus that the Fed’s dual mandate will be manageable going forward, rate cuts will continue toward a lower fed funds rate and a more dovish Fed and Chair will be in place in 2026.'"
Our "Vanguard" article states, "A release titled, 'Vanguard Launches Core-Plus Bond Index ETF (BNDP),' tells us, 'Vanguard … announced the launch of Vanguard Core-Plus Bond Index ETF (BNDP), a new fixed income offering designed to deliver broad, diversified exposure to the U.S. taxable bond market. The ETF is managed by the Vanguard Fixed Income Group, a global leader in bond indexing.'"
It continues, "Josh Barrickman, co-head of Fixed Income Indexing, Americas, comments, 'Vanguard Core-Plus Bond Index ETF brings investors a low-cost, comprehensive solution that spans the full spectrum of U.S. taxable fixed income — including high-yield and emerging market debt <b:>`_… BNDP is built to serve as a `core portfolio holding for those seeking enhanced yield potential while maintaining the rigor and discipline Vanguard is known for.'"
Our first News brief, "Returns Up Again, Yields Inch Higher," states, "Bond fund returns were higher again in November, but yields moved higher. Our BFI Total Index rose 0.42% over 1-month and rose 5.35% over 12 months. (Money funds rose 4.19% over 1-year as measured by our Crane 100 Index.) The BFI 100 increased 0.48% in Nov. and rose 5.95% over 12 mos. Our BFI Conservative Ultra-Short Index was up 0.34% over 1-month and 4.78% for 1-year; Ultra-Shorts rose 0.36% and 4.91%. Short-Term gained 0.44% and 5.78%, and Intm-Term rose 0.53% in Nov. and 6.17% over 12 mos. BFI's Long-Term Index was up 0.48% and up 5.64%. High Yield returned 0.52% in Nov. and 6.53% over 12 months."
A second News brief, "ETF.com writes, 'ETF Investors Poured $148B Into ETFs In November,' which tells us, 'U.S. fixed income ETFs were next [largest flows] with $33.1 billion <b:>`_… In fixed income, the `iShares 0–3 Month Treasury Bond ETF (SGOV) and the iShares 7–10 Year Treasury Bond ETF (IEF) were the top asset gatherers, pulling in $5.5 billion and $4.7 billion, respectively. The iShares Core MSCI Emerging Markets ETF (IEMG) led all international equity ETFs with $4.6 billion of inflows.'"
Another brief states: "Bloomberg Says, 'One of World’s Biggest Bond Fund Managers Warns of ‘Dangerous’ Credit-Ratings Dynamic.' They quote, Dan Ivascyn, chief investment officer at Pacific Investment Management Co., 'It is very, very dangerous to assume something has an investment-grade rating just because the rating agencies assign a rating to it.'"
A BFI sidebar, "Federated's Wu: Go Deeper," says, "Federated Hermes' Chengjun Chris Wu writes on, 'A road less traveled, in bonds,' 'Government bonds, investment grade corporates, high yield -- these are the usual suspects of the bond universe. But our view is that if you're only sticking to the Bloomberg Aggregate or the Bloomberg US Universal Index, you’re missing out on a wealth of opportunities that rarely make the headlines.'"
Finally, another sidebar, "MStar on Bond ETF Surge," says, "Morningstar says, 'Bond ETFs Are Surging in Popularity in 2025. Here Are 5 of the Best.' The article tells us, 'Hundreds of billions of dollars have poured into bond ETFs in the first nine months of 2025. And more of these strategies have hit the market over the past several years. It’s important to remember that some bond ETFs are riskier than others. What should investors consider before tweaking their portfolio? Dan Sotiroff, a senior manager research analyst at Morningstar Research Services and the editor of the Morningstar ETF Investor newsletter, discusses that and shares five top ideas for income investors.'"
