The January issue of our Bond Fund Intelligence, which was sent to subscribers Friday morning, features the lead story, "Top Stories & Funds of '20: More Asset Gains, Low Yields," which reviews the biggest bond fund news and top-performing funds last year, and "Worldwide BF Assets Jump to $12.2 Trillion, Led by U.S.," which covers the previous quarter's increases among the largest global bond fund markets. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund yields fell and returns were up yet again 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. Register too for next week's Money Fund University, Jan. 21-22 Online.)
BFI's "Top Stories and Funds" piece reads, "Yet again, 2020 proved to be a banner year for bonds, after another brief bear scare in March. Bond funds and bond ETFs posted outsized returns and saw record inflows as bond funds broke above $5.0 trillion and bond ETFs broke above $1.0 trillion. We briefly review last year and the top stories from BFI, which celebrates its 6th birthday this month. We also list the top-performing funds from 2020."
It continues, "Bond fund assets stood at $4.653 trillion as of Nov. 30, 2019, up $553.9 billion, or 13.5%, from a year earlier, according to ICI. Bond ETFs totaled $801.7 billion on 11/30/19, up $187.1 billion, or 30.4%, over 12 months. (Bond fund assets rose by $55.7 billion and Bond ETFs rose by $11.3 billion in December, according to BFI.) We show bond funds averaging returns of 5.18% in 2020, after returning –7.46% in 2019 and 0.09% in 2018."
Our Worldwide BF article explains, "Bond fund assets worldwide increased in the latest quarter to $12.2 trillion, the four largest bond fund markets -- the U.S., Luxembourg, Ireland and Germany -- increased noticeably. We review the ICI’s 'Worldwide Open-End Fund Assets and Flows, Third Quarter 2020' release and statistics below."
The piece quotes ICI's report, "'Worldwide regulated open-end fund assets increased during the third quarter of 2020 by 5.6 percent to $56.91 trillion at the end of the quarter, excluding funds of funds. Worldwide net cash inflow to all funds was $292 billion in the third quarter, compared with $910 billion of net inflows in the second quarter of 2020. The Investment Company Institute compiles worldwide regulated open-end fund statistics on behalf of the International Investment Funds Association (IIFA), the organization of national fund associations. The collection for the third quarter of 2020 contains statistics from 46 jurisdictions."
The BFI News brief, "Returns Up, Yields Down in Dec, '20," explains, "Bond fund yields were lower and returns were higher yet again last month. Our BFI Total Index returned 0.71% over 1-month and 5.18% over 12 months. The BFI 100 rose 0.66% in Dec. and rose 6.14% over 1 year. Our BFI Conservative Ultra-Short Index returned 0.04% over 1-mo and 1.37% over 1-yr; Ultra-Shorts averaged 0.22% in Dec. and 1.80% over 12 mos. Short-Term returned 0.52% and 3.86%, and Intm-Term rose 0.55% last month and 7.34% over 1-year. BFI's Long-Term Index rose 0.56% in Dec. and 9.97% for 2020. Our High Yield Index jumped 1.63% last month and is up 4.51% over 1-year.
Another News brief quotes Marketwatch's, piece, "Head of BlackRock's more than $2 trillion fixed-income division says investors should turn to cash as bonds don't offer enough of a 'parachute'." They tell us, "BlackRock's bond chief wants investors to think about holding more cash in a world of depressed interest rates, mainly so they can pounce on any bargains. The head of BlackRock's more than $2 trillion fixed-income division advised investors to shore up their cash buffers at the expense of government bonds … during an interview with MarketWatch."
In a third News update, Morningstar writes, "This Strong Bond Fund Thinks Outside the Box." They comment, "BlackRock Total Return's approach combines rigor and out-of-the-box thinking. Add in BlackRock's deep human and tech resources, and its cheaper share classes merit a Morningstar Analyst Rating of Gold, while some more-expensive ones earn a Silver rating."
Finally, BFI also features the sidebar, "MStar's Year in Bond Funds," which quotes two Morningstar pieces. It begins, "Morningstar's 'The Year in Bond Funds 2020 ' tells us, 'In the most tumultuous year since the global financial crisis in 2008, markets experienced significant volatility as investors got to grips with the coronavirus pandemic. The virus roiled fixed-income markets in the first quarter of 2020, causing a wide-scale selloff in risk assets and a flight to safety, before unprecedented monetary and fiscal stimulus paved the way for a rebound in credit that flowed throughout the remainder of the year.'"
