The August issue of our Bond Fund Intelligence, which was sent to subscribers Friday a.m., features the articles, "Bond Fund Inflows Slow But Assets Decline; Shorts Winning," which reviews the latest bond fund asset and flow data from BFI, ICI and other sources; and "Higher Short-Term Yields Attracting Attention," which excerpts from recent coverage of short-term bond yields and money fund alternatives. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns fell in July while yields rose. 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 funds saw assets decrease in July, but the inflows kept coming, especially to shorter-term funds. Assets fell by $33.6 billion to $3.182 trillion, after rising $27.7B the previous month, according to BFI. Assets have risen $239.8 billion, or 8.1%, over the past year. Our Bond ETF totals jumped by $156.9B to $1.712 trillion in July, but note that we added $154.1B in new funds (including the $100.1B SGOV and some Schwab ETFs)."
It continues, "ICI's 'Combined Estimated Long-Term Fund Flows and ETF Net Issuance' (8/5 data) says, 'Bond funds had estimated inflows of $19.68 billion for the week, compared to estimated inflows of $6.33 billion during the previous week. Taxable bond funds saw estimated inflows of $18.19 billion, and municipal bond funds had estimated inflows of $1.49 billion.' Over 5 weeks, bond funds and ETFs saw inflows of $77.5B."
Our "Higher Short-Term Yields" article states, "Barron's writes, 'Look What the Fed Did to the Bond Market This Week.' The piece says, 'The Federal Reserve may get around to raising its short-term interest rate target later this year, but short-term bond yields already reflect that eventuality. Investors and savers can boost their yields without adding much risk by shifting out of money-market funds.'"
It continues, "They ask, 'But to what, exactly? Extending to longer-term securities adds significant risks without commensurate returns. And the prospect of Fed rate hikes also increases the potential downside for leveraged investments, such as many closed-end funds. Still, there are some bargains to be had -- namely among shorter-term Treasuries. And a few closed-end funds still make the cut.'"
Our first News brief, "Returns Fall in July, Yields Increase," states, "Bond fund returns fell in July while yields rose. Our BFI Total Index dropped 0.74% over 1-month but rose 4.03% over 12 months. (Money funds rose 3.72% over 1-year as measured by our Crane 100 Index.) The BFI 100 decreased 0.83% in July and rose 3.64% over 12 mos. Our BFI Conservative Ultra-Short Index was up 0.29% over 1-month and 4.12% for 1-year; Ultra-Shorts rose 0.31% and 4.14%. Short-Term rose 0.02% and 3.60%, and Intm-Term decreased 1.16% in July and rose 3.24% over 12 mos. BFI's Long-Term Index was down 1.80% and up 2.59%. High Yield fell 0.24% in July and rose 4.99% over 12 mos."
A second News brief, "Barron's Says 'A Popular Corporate Bond Fund Is Trading at a 12-Month Low,'" states, "They write, 'BlackRock's $35 billion iShares iBoxx $ Investment Grade Corporate Bond ETF is currently at $106.74. If it ends the session at that level, it would mark its lowest close since May 23, 2025, when it reached $106.28. The fund has enjoyed an average annual return of 6.2% over the past 15 years, although over the last five years it's down 3.7% annually on average, latest Morningstar data shows.'"
Our third brief says, "An SEC filing for Goldman Sachs Bond Fund and Goldman Sachs Income Fund says, 'The Board of Trustees of the Goldman Sachs Trust has approved Agreements and Plans of Reorganization, which contemplate the conversion of each of the Goldman Sachs Bond Fund and Goldman Sachs Income Fund with and into the Goldman Sachs Core Plus Bond ETF and Goldman Sachs Income ETF, respectively.'"
A BFI sidebar, "Morningstar's Big Bond ETFs," states, "Morningstar writes on 'How the Largest Bond ETFs Performed.' They tell us, 'Out of the 10 largest US bond ETFs, the top performer last month was the $98.8 billion iShares 0-3 Month Treasury Bond ETF SGOV, which gained 0.33%. The bottom performer was the $137 billion iShares Core US Aggregate Bond ETF AGG, which lost 1.31%. Here's more about the performance of the largest bond ETFs.'"
Finally, another sidebar, "NY Times on Rising Rates," states, "The New York Times says that, 'The Bond Market Is Signaling Rising Risks. Investors Should Listen.' The column says, 'The Federal Reserve held interest rates steady in its latest meeting. But another important power in the financial world raised them. That's the bond market, where thousands of traders make moment-by-moment decisions that can add up collectively to crucial policy shifts for the world economy. The bond market is a global giant, with more than $58 trillion in assets in the United States alone. It doesn't command headlines the way the stock market does, but when the bond market talks, people need to listen, in finance and beyond. What the bond market has been saying lately is that risks are rising: risks of increased inflation; wars and tariffs and other geopolitical dislocations; questionable use of vast sums of capital to build artificial intelligence; an uncertain direction for the Fed under new leadership; mounting national debt; and broad political dysfunction.'"
