The September issue of our Bond Fund Intelligence, which was sent to subscribers Tuesday morning, features the lead story, "Ultra-Shorts Brace for Flood as Second Zero Yield Era Dawns," which examines the growth of ultra-shorts as zero yields add to their already explosive growth, and "William Blair's Ruta Ziverte Talks Bonds, Low Duration," which interviews the Chicago firm's head of fixed income. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund yields and returns were mixed in August. 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, and register to attend next week's Crane's Bond Fund Webinar: Ultra-Shorts and Alt-Cash, which is Sept. 24 from 1-2pmET.)
Our Ultra-Shorts piece reads, “Ultra-Short Bond Funds, which have seen even more explosive growth over the past decade than bond funds overall, are poised for more. Zero yields on money market funds and record low yields across the yield curve have set the stage for yet another burst of interest in the space just beyond money market funds. Below, we look at where ultra-shorts have been, and where they’re going.”
It continues, "AssetTV recently posted, Straight From PIMCO: Time to Be Conscious of Your Cash.' It quotes PIMCO's Jerome Schneider, 'Today's economic environment is one fraught with uncertainty, where being selective in risk taking will likely prove to be beneficial. Focusing on the defense is important, in fact, we've had over $800 billion year-to-date and over $2 trillion the past three years into money market funds as investors have grown more defensive.'"
Our Profile says, "This month, Bond Fund Intelligence interviews Ruta Ziverte, the Head of U.S. Fixed Income for William Blair Investment Management. Ziverte discusses the Chicago-based manager's history, her team's emphasis on preserving capital and focus on agency mortgage-backed securities, and alternatives to cash management. Our discussion follows."
BFI says, "Give us some history." Ziverte tells us, "William Blair's fixed-income team has focused on active management in developed fixed-income markets since 1990, when the team launched William Blair's first Income Fund, which was benchmarked to the intermediate government credit index."
She continues, "As markets evolved and client needs shifted, we expanded our lineup. In 1998 we added a core bond strategy, and 10 years later we launched the corresponding mutual fund—the William Blair Bond Fund. Our low duration strategy was launched in 1999 and the corresponding mutual fund in 2009. More recently, our platform has grown into sustainable fixed income due to the integration of ESG analysis into our investment process, and we run a sustainable fixed income strategy for separately managed accounts."
Our Bond Fund News includes the brief, "Yields & Returns Mixed in August," which explains, "Bond fund yields and returns inched higher last month. Our BFI Total Index returned 0.11% over 1-month and 3.72% over 12 months. The BFI 100 gained 0.03% in August and rose 4.69% over 1 year. Our BFI Conservative Ultra-Short Index returned 0.12% over 1-mo and 1.88% over 1-yr; Ultra-Shorts averaged 0.28% in August and 1.86% over 12 mos. Short-Term returned 0.39% and 3.39%, and Intm-Term fell 0.09% last month and 5.80% over 1-year. BFI's Long-Term Index returned –0.78% in August and 7.35% for 1-year. Our High Yield Index rose 1.05% last month and is up just 2.28% over 1-year."
In another News brief, we quote Morningstar's piece, "Not All Core Bond Funds Are Created Equal." They write, "For investors seeking a diversified and relatively conservative fixed-income portfolio anchor, the intermediate core bond Morningstar Category is a good place to look. This category is home to strategies that invest primarily in high-quality U.S. fixed-income issues.... Strategies in this category tend to have durations ... that run from four to seven years."
A third News update covers the WSJ article, "Emerging-Market Bond Funds Face Reckoning." It comments, "Emerging-markets bond funds are facing a reckoning as Covid-19 stresses economies across the globe, reminding investors that assets aimed at producing higher returns in good times can post outsize losses when things go wrong."
BFI also features a sidebar entitled "Braun & Bartolini on Bonds. The piece explains, "AssetTV recently featured the video segment, 'The ETF Show – Fixed Income in Focus,' which tells us, 'PIMCO's David Braun and Matthew Bartolini of State Street Global Advisors discuss strong inflows into fixed income, the Fed's ETF purchases, and the search for yield in this low interest rate environment.'"
Finally, a brief entitled, "Bond Fund Inflows Still Going," tells us, "Bond funds continue to see strong inflows and asset gains. ICI's 'Combined Estimated Long-Term Fund Flows and ETF Net Issuance,' says, 'Bond funds had estimated inflows of $24.54 billion for the week, compared to estimated inflows of $20.04 billion during the previous week [and inflows of $17.8 billion the week before that]. Taxable bond funds saw estimated inflows of $23.20 billion, and municipal bond funds had estimated inflows of $1.34 billion.' Over the past 5 weeks, bond funds and bond ETFs have seen inflows of $109.8 billion."
