The October issue of our Bond Fund Intelligence, which was sent to subscribers Friday morning, features the lead story, "Worldwide Bond Fund Assets Rise in Q2'21 to $13.5 Trillion," which reviews global bond fund markets; and "PMs Talk Ultra-Shorts, SMAs at Money Fund Symposium," which shares some highlights from our recent money fund conference. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns fell in September and yields declined. We excerpt from the new issue below. (Contact us if you'd like to see our latest Bond Fund Intelligence and BFI XLS spreadsheet, or our Bond Fund Portfolio Holdings data.)
BFI's "Worldwide" piece reads, "Bond fund assets worldwide rose in the latest quarter to just under $13.5 trillion. All of the largest markets showed modest gains, with Brazil and China showing the biggest percentage increases. The U.S., Brazil, Ireland, Luxembourg and China showed the largest dollar increases. We review the ICI's 'Worldwide Open-End Fund Assets and Flows, Second Quarter 2021' release, and rank the largest global markets.
The report says, "Worldwide regulated open-end fund assets increased 6.1% to $68.55 trillion at the end of the second quarter of 2021.... The Investment Company Institute compiles worldwide regulated open-end fund statistics on behalf of the International Investment Funds Association (IIFA).... Bond fund assets increased by 4.5% to $13.51 trillion in the second quarter. Balanced/mixed fund assets increased by 7.1% to $8.51 trillion in the second quarter, while money market fund assets increased by 1.1% ... to $8.56 trillion."
The MFS article says of our recent conference, "Crane Data recently hosted its Money Fund Symposium conference in Philadelphia, and while money market funds were of course the main topic, there was a fair amount of talk about investing beyond MMFs. This month, we highlight some of the mentions and we quote from the 'Ultra-Short' session. (Note: The Money Fund Symposium recordings and materials are available to Crane Data Subscribers here.)"
The update explains, "During a panel on 'Major Money Fund Issues,' Invesco's Laurie Brignac comments, 'Clients still want Prime. I'm sure a lot of people have seen the growth of private accounts, separate accounts; those are generally people coming to you trying to get [exposure to credit]. It's all prime. So ... we are seeing growth in Prime, just not 2a-7.... The hard part about separate accounts is that it is more work for the end investor.... It takes a little more time."
Our News brief, "Returns Crash, Yields Drop in Sept," states, "Bond fund returns plunged and yields moved lower last month. Our BFI Total Index fell 0.45% for 1-month but rose 2.86% for 12 months. The BFI 100 returned -0.50% in Sept. and 2.67% over 1-year. Our BFI Conservative Ultra-Short Index was up 0.00% for 1-mo and 0.16% for 1-yr; Ultra-Shorts averaged 0.04% and 1.02%, respectively. Short-Term decreased 0.10% but rose 2.04%, and Intm-Term fell 0.65% in Sept. but rose 1.44% over 1-year. BFI's Long-Term Index fell 1.03% in Sept., but gained 1.22% over 1-year. Our High Yield Index rose 0.11% in Sept. and 9.57% over 1-year."
Another News brief, entitled, "ThinkAdvisor on 'Vanguard Taking Orders for New Core-Plus Bond Fund," tells us, "Vanguard has opened a 10-day subscription period for the launch of its Core-Plus Bond Fund which will begin trading on Oct. 25. It will be the firm's first actively managed mutual fund to launch this year.... Vanguard launched its first ever active bond ETF in April, the Vanguard Ultra-Short Bond ETF (VUSB)."
A third News brief, "ETF Trends Says, 'Short-Term Corporate Bonds May Be Better Than Cash,' tells us, "As fixed income investors increasingly fret about the notion of an interest rate hike ... some are leaving or reducing exposure.... The problem is that money market funds, CDs and the like have barely noticeable yields, meaning that investors are taking on some risk by abandoning bonds. One way to solve for rate risk while keeping income on the table is with short-term corporate bonds." They mention WisdomTree U.S. Short-Term Corporate Bond Fund (SFIG).
A BFI sidebar "Chartwell Launches Short Duration Bond Fund," comments, "A press release entitled, 'Chartwell Investment Partners Launches Short Duration Bond Fund (CWSDX)' explains, 'Chartwell Investment Partners announced the launch of its Chartwell Short Duration Bond Fund (CWSDX). The Fund will be available to individual investors and through major investment platforms including, but not limited to, Charles Schwab, Fidelity, TD Ameritrade, Vanguard, and Pershing. CWSDX is a short duration, fixed income fund that invests at least 75% of its net assets in investment grade short duration bonds and can allocate up to 25% of the fund to short duration high yield bonds. The investment objective of the Fund is to maximize current income by investing in high quality, short maturity fixed income securities while also preserving capital.'"
Finally, a sidebar entitled, "BF Inflows Stall in October," tells readers, "Strong bond fund inflows and asset gains continued in September, but stalled in the first week of October. ICI's 'Combined Estimated Long-Term Fund Flows and ETF Net Issuance,' says, 'Bond funds had estimated inflows of $931 million for the week [ended Oct. 6], compared to estimated inflows of $6.04 billion during the previous week. Taxable bond funds saw estimated inflows of $296 million, and municipal bond funds had estimated inflows of $634 million.' Over the past 5 weeks, bond funds and bond ETFs have seen inflows of $44.0 billion."
