The January issue of our Bond Fund Intelligence, which was sent to subscribers Thursday a.m., features the articles, "Top Stories & Funds of '25: Another Big Year for Bonds," which mentions some highlights and the best-performing funds by category in 2025; and "Worldwide BF Assets Jump to $15.8 Trillion, Led by U.S.," which summarizes 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 and yields were mixed in December. 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 19-20 in Boston, Mass.)
BFI's lead article states, "After a slow start to the year, bond funds ended up outperforming money funds in 2025, unlike 2024 where the opposite was true. In 2023 they had an ugly start but staged a nice comeback in later months. (This followed a brutal 2022.) Bond assets were up moderately in 2025 after being up in 2024. They rose by $267.8 billion, or 9.4%, to $3.104 trillion, according to our BFI XLS. Bond ETFs rose $252.2B (21.4%) to $1.431 trillion."
It continues, "According to ICI's broader fund asset series, bond funds hit a record $5.5 trillion on 11/30/25, with assets growing $375.6 billion (7,3%) over the past 12 months, after seeing increases of $379B for the same period in 2024. Bond ETFs totaled $2.219 trillion on 11/30/25, up $436.6 billion, or 24.5%, over 12 months."
Our "Worldwide BF Assets" article states, "Bond fund assets worldwide increased in the latest quarter to $15.76 trillion, led higher by four of the five largest markets — the U.S., Luxembourg, Ireland and Brazil, according to the ICI’s '`Worldwide Regulated Open-End Fund Assets and Flows, Third Quarter 2025.' The report says, 'Worldwide regulated open-end fund assets, excluding assets in funds of funds, increased 5.0% to $84.90 trillion at the end of the third quarter of 2025 <b:>`_… The `Investment Company Institute compiles worldwide regulated open-end fund statistics on behalf of the International Investment Funds Association (IIFA).'"
It continues, "They explain, 'The growth rate of total regulated open-end fund assets, as reported in US dollars, increased due to US dollar depreciation over the third quarter of 2025.... Bond fund assets increased by 3.9% to $15.76 trillion in the third quarter. Balanced/mixed fund as sets increased by 4.2% to $8.40 trillion in the third quarter, while money market fund assets increased by 3.5% globally to $12.75 trillion.'"
Our first News brief, "Returns & Yields Mixed in December," states, "Bond fund returns were mostly higher in December and yields were mostly lower. Our BFI Total Index rose 0.18% over 1 month and rose 6.39% over 12 months. (Money funds rose 4.12% over 1-year as measured by our Crane 100 Index.) The BFI 100 increased 0.07% in Dec. and rose 7.13% over 12 mos. Our BFI Conservative Ultra-Short Index was up 0.39% over 1 month and 4.79% for 1-year; Ultra-Shorts rose 0.42% and 4.98%. Short-Term gained 0.35% and 6.07%, and Intm-Term fell 0.06% in Dec. and 7.63% over 12 mos. BFI’s Long-Term Index was down 0.38% and up 7.41%. High Yield returned 0.58% in Dec. and 7.50% over 12 months."
A second News brief, "Morningstar on 'How the Largest Bond Funds Did in 2025.' They write, 'Each of the 10 largest active bond funds beat their category averages in 2025, while six of the 10 largest bond index funds outperformed. PIMCO Total Return Fund and PIMCO Income Fund held the highest category rankings among the largest active bond funds for their 2025 returns. Vanguard Intermediate-Term Bond ETF ranked highest among the largest bond index funds for its performance in the intermediate core bond category.'"
Another brief states: "Barron's Says, 'Worries About the Bond Market Are Rising. Don't Sell.' They write, 'Bonds ... remain attractive, even if income-oriented investors should make some adjustments to their portfolios to prepare for the year ahead. This has been a good year for bonds. Every major subcategory, from emerging market and high-yield bonds to Treasuries and bank loans, has generated positive returns.... The Vanguard Short-Term Treasury exchange-traded fund, for instance, had a marginally better year than the Vanguard Long-Term Treasury ETF <b:>`_…. For investors, that can mean shifting some capital into ETFs like `iShares MBS, Schwab Short-Term Treasury, or Vanguard Short-Term Corporate Bond.'"
A BFI sidebar, "Mstar on Bond ETF Moment," says, "Morningstar says, 'Bond ETFs Are Having a Moment. Here’s How They Can Benefit Your Portfolio in 2026.' The article explains, 'Bond exchange-traded funds rarely get the attention they deserve. Until recently, most have tracked indexes. They’re less volatile than stocks and often used to fine-tune a portfolio’s overall risk, so it’s easy to write them off as boring.'"
Finally, another sidebar, "FT Looks at Passive vs. Active," says, "The Financial Times asks, 'When it comes to bond funds, which is better: passive or active?' They respond, 'For those retail investors keen to protect their portfolios, there is a retro solution: add more bonds to your portfolio. The simplistic 60/40 equities/bonds strategy may have gone out of fashion ..., but the appetite for bonds in an uncertain world is back in a big way. `The question is, how best to gain access to defensive income investments: through active or passive management? When it comes to stocks, passive inflows now far exceed the amount put into active funds. But ... over the past decade, cumulative flows into active open-ended and exchange traded bond funds (ETFs) have outpaced those of passive funds by roughly a trillion dollars, according to data from Morningstar.'"
