The May issue of our Bond Fund Intelligence, which was sent to subscribers Friday morning, features the lead story, "BlackRock's Fink, Federated's Donahue on Bond Funds in Q1," which reviews discussions of bond fund sectors on recent earnings calls; and, "Baird's Mary Ellen Stanek Wins Morningstar PM Award," which quotes from a press release on the ultra-short manager. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns continued sharply lower while yields rose for the 7th straight month. 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.) (See also The Wall Street Journal's, "Crash of TerraUSD Shakes Crypto. 'There Was a Run on the Bank'" and editorial "Warnings From the Crypto Crash.")
Our "BlackRock, Federated" piece reads, "During the latest round of quarterly earnings calls, both BlackRock and Federated Hermes discussed demand for bond funds, the recent bond market turmoil and a number of other issues. BlackRock CFO Gary Shedlin comments, "In fixed income ETFs, we generated $8 billion in net inflows for the quarter. Similar to equity ETFs, we are seeing more investors adopt and use fixed income ETFs to gain market exposure and for tactical positioning within their fixed income exposures."
He explains, "We saw demand for Treasury, Short Duration, Inflation-Linked, Sustainable Munis and broad-based market exposures, [which] more than offset risk-off sentiments in areas like High Yield and Emerging Markets. Our growth in fixed income ETFs highlight the diversity of our fixed income ETF product range and our ability to deliver the market qualities clients expect in stressed markets."
Our "Baird's Stanek" piece states, "A press release entitled, '`Mary Ellen Stanek Receives Morningstar Outstanding Portfolio Manager Award,' tells us, 'Employee-owned Baird announced today that Mary Ellen Stanek, CFA, President of Baird Funds and Co-Chief Investment Officer of Baird Advisors received Morningstar's Outstanding Portfolio Manager Award. The award is one of the 2022 U.S. Morningstar Awards for Investing Excellence."
It explains, "The Morningstar Awards for Investing Excellence recognize portfolio managers and asset-management firms that demonstrate excellent investment skill, the courage to differ from the consensus to benefit investors, and an alignment of interests with the strategies' investors. Morningstar's manager research analysts conduct in-depth qualitative analyses in order to select nominees and, subsequently, vote to determine the award winner. Stanek is being recognized as the Co-Chief Investment Officer of the team that manages Baird Ultra Short Bond Fund (BUBIX), Baird Short-Term Bond Fund (BSBIX), Baird Intermediate Bond Fund (BIMIX), Baird Aggregate Bond Fund (BAGIX) and Baird Core Plus Bond Fund (BCOIX)."
Our first News brief, "Returns Slide for 4th Month; Losses Accelerating," says, "Bond fund returns fell sharply again while yields rose for the 7th straight month in April. Our BFI Total Index fell 2.39% over 1-month and fell 5.49% over 12 months. The BFI 100 returned –2.71% in April and –5.80% over 1-year. Our BFI Conservative Ultra-Short Index was down 0.07% for 1-month and down 0.68% for 1-year; Ultra-Shorts declined 0.28% and 1.28%, respectively. Short-Term decreased 0.86% and 3.60%, and Intm-Term fell 3.20% in April and fell 7.26% over 1-year. BFI's Long-Term Index fell 4.64% and 9.00%r. High Yield fell 2.58% in April and 3.22% over 1-year."
We also quote Barron's on "The Exodus From Bond Funds Is Creating Bargains." The piece explains, "Investors are fleeing corporate bond funds en masse. That means bonds in some sectors, including banks, look cheap. Withdrawals from investment-grade corporate bond funds have totaled $28 billion, on net, over the past 21 weeks, according to Refinitiv Lipper. That is about 1.6% of the total assets that were invested in the market before the selling began."
A third News brief is headlined, "The NY Times on 'How to Endure the Big Decline in Bonds,' explains, "It's been a horrible start of the year for the bond market, the worst in decades. If you hold bonds in a mutual fund or exchange-traded fund, it's highly likely that your quarterly statement next month will show that you have lost money."
Yet another News brief, "P&I Posts 'Vanguard reduces fees on 4 large bond ETFs," says, "Vanguard Group on Friday reported expense ratio reductions on four bond exchange-traded funds, including its biggest bond ETF — the Vanguard Total Bond Market ETF, a Vanguard spokesman said."
Also, a BFI sidebar, "William Blair Liquidates BFs," tells us, "A filing for William Blair Funds says, 'Upon recommendation of the Adviser, the Board of Trustees of William Blair Funds determined that it was in the best interests of each of the William Blair Bond Fund, William Blair Short Duration Bond Fund, and William Blair Ultra-Short Duration Bond Fund to redeem all the shares of the Funds on or before April 15, 2022, and then terminate the Funds. Shareholder approval of the liquidation is not required. The Funds will be closed to new investors effective Feb. 14, 2022 but will remain open for investment until Feb. 28, 2022 for existing shareholders."
Finally, another sidebar, "WSJ on Bond Beating," explains, "The Wall Street Journal writes 'It's the Worst Bond Market Since 1842. That's the Good News.' The column asks, 'How much more of a beating can bond investors take? So far in 2022, with inflation raging, bonds have lost 10% -- among the worst returns in U.S. history. On Wednesday, the Federal Reserve raised interest rates by 0.5 percentage points, the sharpest increase in 22 years. Yet, just as your body begins healing from an injury before you can feel any improvement, the worst for bond investors might already be ending. Those who dump bonds now might be making a mistake by selling low after buying high."
