The January issue of Crane Data's Bond Fund Intelligence, which will be sent out to subscribers Tuesday, features the lead story, "Top Stories & Funds in '17; Outlook for '18; BFI Turns 3," which reviews the top stories and funds of 2017, and it features the profile, "Dechert's Cohen on Regulations Impacting Bond Funds," an interview with Partner Stephen Cohen on major regulatory issues. Also, we recap the latest Bond Fund News, including yield declines in December and the latest Worldwide bond fund totals. BFI also includes our Crane BFI Indexes, which showed increases in December. We excerpt from the latest BFI below. (Watch for more excerpts from our Dechert profile later this month on www.cranedata.com, and contact us if you'd like to see a copy of our latest Bond Fund Intelligence and BFI XLS. Note: We've also uploaded the Powerpoints and Binder for our upcoming Money Fund University, which is Jan. 18-19 in Boston. Subscribers and Attendees may now access these via the bottom of our "Content" page or our MFU 2018 Download Center, and clients are welcome to "crash" some sessions or our cocktail party!)
Our lead Bond Fund Intelligence story says, "Bond funds had one of their best years ever in 2017, with record inflows, solid returns, and minimal issues. As with the prior year, assets jumped sharply and concerns over a bear market were unfounded. We briefly review last year, including the top stories from BFI, which celebrates its 3rd birthday this month, and we list the top-performing funds in 2017, below. We also take a look at how 2018 is shaping up."
It continues, "Bond fund assets broke above $4 trillion and bond ETFs broke above $500 billion late in 2017. According to ICI, bond fund assets stood at $4.037 trillion as of Nov. 30, 2017, up $396.6 billion, or 10.9%, from a year earlier. Bond ETFs totaled $547.7 billion on 11/30, up $126.6 billion, or 30.0%, over the past year."
BFI's Dechert Profile says, "This month, BFI interviews Stephen Cohen, a Partner at Dechert LLP, on regulations impacting bond funds. Cohen has been focused on a number of topics involving fixed-income funds, such as liquidity, reporting, and issues involving ultra-short bond funds. (He will also be presenting the "Regulatory Update" at our upcoming Bond Fund Symposium in Los Angeles, March 22-23.) Our Q&A with Cohen follows."
BFI says, "Tell us about your background. Cohen answers, "We have a very long history representing bond mutual funds as well as closed end bond funds and bond ETFs as well. We organized some of the earliest municipal bond funds for E.F. Hutton in the early 1980s.... We also helped launch bond funds for Templeton in the 1980s and 1990s. Currently, we represent a number of the largest bond fund groups in the industry.... So we have a pretty rich history representing bond funds."
He adds, "Personally, I've been working with bond funds since I started at Dechert in 2005. Almost every client I work with offers bond mutual funds, or bond ETFs or closed end bond funds.... As you know, I work with a number of money market fund groups and most of those by extension have ultra short bond funds or other bond funds."
A Bond Fund News brief entitled, "Yields Mixed, Returns Up in Dec.," explains, "Yields fell for most bond funds, but were up for shorter-term funds. Returns were higher across our Crane BFI Indexes last month. The BFI Total Index averaged a 1-month return of 0.42% and a gain of 4.03% over 12 months. The BFI 100 returned 0.35% in Dec. and 4.09% over 1 year. The BFI Conservative Ultra-Short Index returned 0.10% over 1 month and 1.31% over 1-year; the BFI Ultra-Short Index averaged 0.07% in December and 1.53% over 12 mos. Our BFI Short-Term Index returned 0.09% and 1.81%, and our BFI Intm-Term Index returned 0.41% and 3.78% for the month and year. The BFI High Yield Index rose 0.39% in Dec. and rose 6.11% for 1 year."
Another brief, entitled, "Barron's Writes, "2017 Cash Magnets: Actively Run Intermediate Bond Funds," says, "Active funds again had negative net cash flows in 2017, though less than in 2016. But there was one winner in the bunch: taxable intermediate-term bond funds. Despite ... fear of a looming bond bear market, they were last year's most popular active mutual funds.... But part of the interest reflects the meager yields in short-term bond funds and on cash that have pushed investors further afield in their quest for income." (See our "Link of the Day" for more.)
Yet another brief comments, "P&I Says, "Active bond funds had a good 2017." The piece explains, "Institutional active bond funds brought in about $171.5 billion in 2017 at an average rate of $42.9 billion per month. Over the same period, active institutional equity funds ... lost about $155.5 billion in net outflows. 2017 was relatively better than 2016, when ... bond funds brought in about $49 billion. American Funds led all managers in inflows, bringing in $84.2 billion, followed by Dimensional Fund Advisors ($30.4 billion) and PIMCO ($29 billion)."
A sidebar entitled, "World Bond Funds Break $10 Trillion," tells us, "Bond fund assets worldwide broke the $10 trillion level for the first time ever in the latest quarter. The largest bond fund markets -- the U.S., Luxembourg, Brazil, Ireland and Germany -- all showed gains in the latest quarter (Q3'17) according to the Investment Company Institute's "Worldwide Open-End Fund Assets and Flows, Third Quarter 2017." ICI's report shows worldwide bond fund assets increased $400.2 billion, or 4.1%, to $10.176 trillion in the third quarter. Bond funds represent 21.5% of the $47.37 trillion in worldwide mutual fund assets. Globally, bond funds posted inflow of $226 billion in Q3 of 2017, after an inflow of $220B in Q2."
It adds, "According to Crane Data's analysis of ICI data, the U.S. had $4.526 trillion in bond fund assets as of Sept. 30, 2017, representing 44.5% of the worldwide market. US bond fund assets were up $139.3 billion in the quarter, or 3.2%. Luxembourg remained the second largest bond fund market with $1.436 trillion, or 14.1%, after a $76.2 billion, or 5.6% jump. Brazil remained in third place with $732.8 billion, or 7.2% of worldwide bond fund assets. Ireland moved up to fourth earlier in 2017 with $603.0 billion, or 5.9%. Germany fell to 5th place with $448.7 billion, or 5.4%. (Luxembourg and Ireland are the most popular domiciles for funds marketed across Europe.)"
Bond Fund Intelligence also features a "Top Performers for 2017" table, which lists the No.-1 performing bond funds based on total return for through 12/31/17 in each of our 7 bond fund categories. PIMCO Short Asset Inv Fund Inst (PAIDX) was the top-performing fund in our Conservative Ultra-Short category, PIMCO Emerging Local Bond Inst (PELBX) won in the Global category, Fidelity Capital & Income (FAGIX) returned the most in our High Yield category, PIMCO Income Inst (PIMIX) was No. 1 among IntmTerm BFs, PIMCO Long-Term Credit Inst (PTCIX) was No. 1 among Long Term Bond Funds, Nuveen High Yield Muni I (NHMRX) was No. 1 among Muni Bond Funds, Putnam Diversified Inc Y (PDVYX) was No. 1 among Short Term BFs, and BBH Limited Duration I (BBBIX) placed first among Ultra-Short Bond Funds. Congratulations to the winners!
Finally, we note that our BFI celebrates its 3rd birthday, writing, "Bond Fund Intelligence officially launched 3 years ago. BFI's mission is to bring affordable and comprehensive news and statistics coverage to the bond fund investment community. In our first issue, we began tracking 200 bond funds, but by December 2015 we were tracking 359 funds, totaling $1.663 trillion in assets -- about half the market. In December 2016, we were tracking 489 funds with $2.096 trillion in assets, and over the past year, we've grown our collection to 597 funds with $2.492 trillion in assets. We'll continue to add funds and expand our data collection (we're now publishing Bond Fund Portfolio Holdings), and we plan to launch a BFI Daily and a database query system for our Bond Fund Wisdom product suite in 2018. Thank you for your support, and please let us know if you have any feedback!
