The April issue of our Bond Fund Intelligence, which will be sent to subscribers Monday morning, features the stories, "Worldwide BF Assets Jump to $11.5 Trillion, Led by U.S., Lux," which reviews ICI's latest stats on global bond fund markets, and "Highlights from Bond Fund Symposium '23 in Boston," which excerpts from our recent ultra-short bond fund event. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns jumped in March while yields also moved higher. 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.) (Reminder: Make your hotel reservations soon for our big Money Fund Symposium show, which will take place June 21-23, 2023 in Atlanta, Ga.)
Our "Worldwide" article says, "Bond fund assets worldwide increased in the latest quarter to $11.5 trillion, led higher by the four largest bond fund markets -- the U.S., Luxembourg, Ireland and Brazil. ICI's 'Worldwide Open-End Fund Assets and Flows, Fourth Quarter 2022' says, 'Worldwide regulated open-end fund assets increased 7.1% to $60.15 trillion at the end of the fourth quarter of 2022.... ICI compiles worldwide regulated open-end fund statistics on behalf of the International Investment Funds Association (IIFA).'"
It continues, "They explain, 'The growth rate of total regulated open-end fund assets reported in US dollars was increased by US dollar depreciation over the fourth quarter of 2022.... Bond fund assets increased by 2.6% to $11.55 trillion in the fourth quarter. Balanced fund assets increased by 7.7% to $7.09 trillion in the fourth quarter, while money fund assets increased by 6.7% globally to $8.86 trillion.'"
Last month, we hosted our latest Crane's Bond Fund Symposium in Boston. The keynote, “Ultra‐Shorts: Yield Is Back After Rough Year,” featured Peter Crane with J.P. Morgan A.M.’s Dave Martucci and PIMCO’s Jerome Schneider. We quote from this segment. (Thanks again to those who attended and supported BFS, and Crane Data subscribers may access the conference materials via our Bond Fund Symposium 2022 Download Center.)
Our "BFS Highlights" piece states, "Last month, we hosted our latest `Crane's Bond Fund Symposium in Boston. The keynote, 'Ultra‐Shorts: Yield Is Back After Rough Year,' featured Peter Crane with J.P. Morgan A.M.'s Dave Martucci and PIMCO's Jerome Schneider. We quote from this segment. (Thanks again to those who attended and supported BFS, and Crane Data subscribers may access the Powerpoints, recordings and conference materials via our Bond Fund Symposium 2023 Download Center.)"
It continues, "Schneider says, 'Pete, thanks very much for doing this. This is fantastic for the industry and it's a great forum for us. Obviously, cash is back, and the front-end is in focus.... I think that ... this environment is one where there's going to be a lot of differentiation.... While we are here to talk about cash and money markets and front-end opportunities, one thing that's come into mind is ... the nature of cash management and how important it is.'"
Our first News brief, "Returns Jump Sharply, Yields Up in March," explains, "Bond fund returns rebounded strongly and yields moved higher last month. Our BFI Total Index rose 1.51% over 1-month but is down 2.09% over 12 months. The BFI 100 rose 1.99% in March and lost 2.66% over 1-year. Our BFI Conservative Ultra-Short Index was up 0.33% over 1-month and is up 2.20% for 1-year; Ultra-Shorts rose 0.33% and are up 1.35% over 12 mos. Short-Term returned 1.13% and -0.40%, and Intm-Term rose 2.07% and -3.99% over 1-year. BFI's Long-Term Index rose 2.39% and -5.87%. High Yield rose 1.00% and fell 2.18% over 1-yr."
A second News brief, "Morningstar: Ultra-Shorts Not Cash," discusses, 'Why Ultrashort Bond Funds Aren't Cash Substitutes.' It tells us, 'CDs, money market funds, and other cash-like assets are finally generating attractive yields for the first time in decades. At the same time, however, investors have sold off ultrashort bond funds, which focus on investment-grade bonds with shorter-term durations (typically less than one year). The category -- which raked in more than $260 billion in cumulative net inflows over the 10-year period ended in 2021 -- suffered about $9.2 billion in net outflows during 2022. These outflows suggest a potential mismatch between investors' expectations for safety and the performance they actually received.... I'll delve into why ultrashort bond funds aren’t a cash substitute.'"
Our News brief, "BlackRock's Fink on Q1 Earnings Call," quotes the CEO, "BlackRock led the industry with $34 billion of bond ETF net inflows and we're representing over 60% of total fixed income ETF trading volumes during the quarter. Especially as the U.S. Treasury market experienced large and historic moves, investors turn to bond ETF access treasury markets and manage interest rate risk."
Another brief, "Bond Funds Aren't as Safe as You Think. What to Know," excerpts from a Barron's article, 'The pain isn't over for bond funds. Bond investors who had forgotten what a rising interest-rate environment was like were reminded last year. Bonds move inversely to interest rates, and with the Fed raising rates from 0.25% to 4.5%, prices fell by double digits.'"
A BFI sidebar, "Q&A w/T. Rowe's Mickel," says, "Barron's published a Q&A with T. Rowe Price's Cheryl Mickel entitled, 'Finding Good Yields in the Banking Tumult.' It says, 'As banking turmoil roils markets, Cheryl Mickel, who oversees money markets, short-term taxable bonds, and stable value for T. Rowe Price's fixed-income group, is finding opportunities amid the chaos -- even in the short-term debt of banks.... Mickel, who heads T. Rowe Price's U.S. Taxable Low Duration Group, oversee[s] more than $100 billion in assets. But rather than hunker down, Mickel's team is searching for opportunities to lock in higher yields.'"
Finally, another sidebar, "ICI Expense Survey," says, "Late last month, mutual fund trade group the Investment Company Institute' published the report, 'Trends in the Expenses and Fees of Funds, 2022.' It tells us, 'On an asset-weighted basis, average expense ratios incurred by mutual fund investors have fallen substantially over the past 26 years.... Average expense ratios of hybrid and bond mutual funds, as well as money market funds, have ... declined meaningfully since 1996.' A table, shows bond fund averages falling from 0.84% to 0.37% over this period."
