Crane Data hosted its first Bond Fund Symposium conference in Boston last week, and the turnout and enthusiasm of attendees confirmed what many had thought, that the ultra-, ultra short or "conservative" ultra-short bond fund sector is one of the hottest and fastest-growing in the mutual fund industry. Bond Fund Symposium brought together 150 bond fund managers, marketers, and professionals with fixed-income issuers, investors, regulators and service providers for a day and a half of intense discussion on all things bond fund-related. We briefly review the some of the sessions below, but watch for more coverage in the upcoming issues of our Bond Fund Intelligence and Money Fund Intelligence newsletters. Thanks to our excellent speakers, our generous sponsors, and all who attended our event last week! Mark your calendars too for next year's event, which will be March 22-23, 2018, in Newport Beach, Calif. (Note: The session recordings, Powerpoints and full conference binder are available to attendees and Crane Data subscribers here or at the bottom of our "Content" page.)

Bond Fund Symposium's Keynote, "The Time Is Now for Short‐Term Strategies," was given by Jerome Schneider, Managing Director and Head of Short-Term at PIMCO. Schneider gave an excellent overview of the short-term space and PIMCO's dramatic growth in this area. (Assets in their ultra-shorts have increased from under $4 billion before the crisis to over $18 billion currently.) He also urged attendees to redouble efforts to educate investors about the benefits of ultra-short bond funds. (Unfortunately, our recorder wasn't on for this session, so we don't have a transcription.)

The next session, "Segmenting the Ultra-Short Bond Market," featured Crane Data's Peter Crane, with Fidelity Investments' Michael Morin and J.P. Morgan A.M.'s Dave Martucci. Crane commented, "The short term bond fund space is pretty large overall, you're looking at about $400 billion roughly." But ultra-short bond funds are just a quarter of this and "conservative" ultra-short a quarter of this. He added, "There are [funds] near money funds, and there are short-term funds that are doing things that are alien to money market mutual funds.... One of our decisions early on was to launch a Conservative Ultra-Short category, to in effect slice the ultra-short in two, to make a segment that is more liquid, more suited to institutional investors."

Morin explained, "The one thing you won't hear from me is 'enhanced cash.' I have a long-memory [and] remember ... having people walk through the door 'I've got the greatest new product for you.... It's just like a money market fund but at a higher yield'.... We wanted to clearly delineate the conservative ultra-short bond space from the money market space. And that really went into the name of our fund, which we ended up with the Conservative Income Bond Fund. We intentionally left 'bond fund' in there to really try to eliminate any confusion that this was a money market fund in disguise."

He continued, "As Jerome started off the conference, this is all about investor education and making sure that they understand that these funds are not money market funds. The risk profile of the asset class is very different than money market funds, and it's imperative that we, as industry practitioners, make sure that clients know what they're buying. I think the worst thing that could happen for us in this emerging field of conservative ultra-short bond funds is clients really don't understanding ... them."

The conference also featured the sessions: "Bond Strategists: Outlook for Rates," with Bank of America Merrill Lynch's Mark Cabana and RBC Capital Markets' Michael Cloherty; "Ratings & Risks in Bond Funds," with Fitch Ratings' Greg Fayvilevich and Standard & Poor's Ratings Peter Rizzo; and, "Senior Portfolio Manager Perspectives," with Putnam Investments' Joanne Driscoll, Goldman Sachs AM's John Olivo <b:>`_, and Northern Trust Asset Mgmt's Morten Olsen. Olivo explained, "We also have [a fund] that maybe is an offshoot from a money market fund, where the duration is 6 months or shorter, and [it's] a little bit further out the curve. So you're really benefiting from the dislocation that we've seen over the last 9 months."

Olsen added, "Ultra-short really falls under what we call liquidity management capabilities, short duration. It's anything that goes from overnight and out to 5 years on the curve.... I'd say roughly $20 billion falls under ultra-short.... There's been a lot of talk about segmenting ultra-short and we certainly do that within our team as well. We have an ETF which is roughly 6 months duration. We have our standard ultra-short strategy, which is similar to that. It's a 6 month duration target. Sometimes it'll be a little longer, or sometimes it'll be a little shorter."

Driscoll told the audience about the Putnam Short Duration Income Fund, "It really goes back to the financial crisis, and [then] the regulatory environment in 2010 ... we went to the trustees and said 'Listen, we want to create a product that sits just outside the traditional 2a-7 funds'.... Clearly, it's not a money market fund, but it's able to exploit those changes. So we launched the fund in 2001, it has about $6.5 billion.... How we position this fund is a maximum one year duration, all investment grade, all dollar denominated."

The first day also featured: "Major Issues in Fixed-Income Investing," moderated by Alex Roever of J.P. Morgan Securities and featuring: Tony Wong of Invesco, Jeff Weaver of Wells Fargo Funds, and Bob Ostrowski of Federated Investors; ETF Trends & Investors; USBF Portal Usage," with James Meyers of Invesco PowerShares and Alex Swartwood of Institutional Cash Distributors; and, "Corporate & Intermediate-Term Bond Funds," with Justin Bullion of Payden & Rygel, Tom Connelley of State Street Global Advisors, and Sean Rhoderick of PNC Capital Advisors.

Day Two's agenda included: "State of the Bond Fund Marketplace" with Peter Crane and ICI's Sean Collins; "Regulatory Update: Liquidity & More" with Dechert's Stephen Cohen, and Sullivan & Worcester's John Hunt; a "Government Bond Fund Discussion" with Federated's Sue Hill; "Municipal Bond Fund Issues" with Neuberger Berman's Kristian Lind and Fidelity Investments' Doug McGinley; and, finally, "Bond Fund Data, Statistics & Software with Peter Crane and James Morris of Investortools.

Crane Data recently celebrated the second anniversary of its Bond Fund Intelligence newsletter and BFI XLS bond fund information service and benchmarks, and continues to expand its fixed income fund offerings with the launch of Bond Fund Symposium. As we mentioned, our next Crane's Bond Fund Symposium is tentatively scheduled for March 22-23, 2018, in Newport Beach, California. We'll be preparing the agenda later this summer, but we'd love to hear more feedback for the second iteration of this event. We'd also love to get more sponsor support and will be reviewing requests for speaking slots in the coming months. (Contact Pete for more information.)

Finally, Crane Data is also making preparations for our "big show," `Money Fund Symposium, which will be held June 21-23, 2017, at the Atlanta Hyatt Regency. The agenda is now set and registrations are being taken, and we encourage attendees to make hotel reservations soon. We're also now taking registrations for our next European Money Fund Symposium, which will be Sept. 25-26, 2017, in Paris, France. Finally, watch for more details on our next Money Fund University, which will be in Boston, Jan. 19-20, 2018, in coming months. We hope to see you at one of our events in 2017 or 2018!

Email This Article




Use a comma or a semicolon to separate

captcha image