The January issue of our Bond Fund Intelligence, which was sent to to subscribers Wednesday morning, features the lead story, "Top Stories & Funds of '19; Outlook for '20; BFI Turns 5," which looks at the top bond funds and bond fund articles of 2019, and a second article, "Worldwide BF Assets Dip to $11.4 Trillion, But US BFs Up," which reviews international bond fund markets in Q3'19. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show bond fund yields mixed and returns up in December. We excerpt from the new issue below. (Contact us if you'd like to see our Bond Fund Intelligence and BFI XLS spreadsheet, or our Bond Fund Portfolio Holdings data.)
Our "Top Stories & Funds of '19" article says, "Once again, 2019 proved to be a banner year for bonds, after a brief scare in late 2018. Bond fund and bond ETFs posted excellent returns and brought in waves of cash inflows. The year was undoubtedly one of the best ever for bond funds. We briefly review last year, including top stories from BFI, which celebrates its 5th birthday this month, and we list the top-performing funds in 2019."
It continues, "Bond fund assets rose above $4.65 trillion and bond ETFs broke above $800 billion in late 2019. According to ICI, bond fund assets stood at $4.653 trillion as of Nov. 30, 2019, up $553.9 billion, or 13.5%, from a year earlier. Bond ETFs totaled $801.7 billion on 11/30/19, up $187.1 billion, or 30.4%, over the past year. (Bond fund assets rose by $33.8 billion and Bond ETFs rose by $24.0 billion in December, according to BFI's numbers.) We show total bond funds averaging returns of 7.45% in 2019, after returning –0.09% in 2018 and 4.03% in 2017."
Our "Worldwide BF Assets" article reads, "Bond fund assets worldwide decreased slightly in the latest quarter to $11.4 trillion, though two of the four largest bond fund markets — the U.S. and Ireland — increased strongly. But No. 3-ranked market Brazil saw assets fall sharply. (It appears Brazil erroneously reported a sharp jump in assets last quarter, which was erased from the ICI's totals this quarter.) We review the ICI's 'Worldwide Open-End Fund Assets and Flows, Third Quarter 2019,' below.”
ICI's report says, "Worldwide regulated open-end fund assets increased 0.3% to $51.61 trillion at the end of the third quarter of 2019, excluding funds of funds. Worldwide net cash inflow to all funds was $676 billion in the third quarter, compared with $339 billion of net inflows in the second quarter…. The Investment Company Institute compiles worldwide open-end fund statistics on behalf of the International Investment Funds Association, the organization of national fund associations.'"
Our Bond Fund News includes the brief, "Yields Mixed, Returns Up in December," which tells us, "Bond fund yields were flat or mixed and returns were up last month. Our BFI Total Index returned 0.43% over 1-month and 7.46% over 12 months. The BFI 100 returned 0.41% in Dec. and 8.10% over 1 year. Our BFI Conservative Ultra-Short Index returned 0.17% over 1-mo and 2.86% over 1-yr; Ultra-Shorts averaged 0.24% in Dec. and 3.34% over 12 mos. Short-Term returned 0.33% and 5.11%, and Intm-Term gained 0.14% last month and rose 8.26% over 1-year. BFI's Long-Term Index returned -0.04% in Dec. and 11.27% for 1-yr; our High Yield Index rose 1.61% in Dec. and 12.04% for 1-year."
In another News brief, we quote the Financial Times piece, "Bond funds top inflow record." They write, "Global investors pumped a record amount of cash into fixed-income funds for the week ending Wednesday, after the threat of war prompted them to seek shelter in safe havens. Fixed income mutual funds and exchange traded funds around the world took in $23.2bn, the largest total in data going back to 2001, according to EPFR Global."
A third News update covers the Wall Street Journal article, "Morningstar's Big Bet on Bond Ratings Hits Turbulence." They explain, "In mid-November, bond investors got an unwelcome surprise from one of the main ratings firms in a hot corner of the bond market: About 25% of the bonds that it had rated were likely to be downgraded. Several days later, after calls poured in from confused investors, ratings firm DBRS Morningstar Inc. backtracked and said it had made an error."
Finally, BFI features a sidebar entitled "Columbia's 2020 Outlook." It says: "Columbia Threadneedle Investments' Deputy Global Head of Fixed Income Gene Tannuzzo gives a '2020 Fixed Income Outlook' in a recent Asset TV video. He says, 'Looking into 2020 the most important thing on our mind are the companies and industries that can cope with trade volatility the best. Trade is not something that's going to be resolved overnight, whether it's the US and China trade negotiation, or US and Europe or any other pair. And it's something that is going to be top of mind for all companies as they think about planning their businesses in 2020 and beyond.'"
