The October issue of our Bond Fund Intelligence, which was sent to subscribers Tuesday morning, features the stories, "Worldwide BF Assets Jump to $13.3 Trillion, Led by U.S.," which reviews the latest statistics on bond fund markets outside the U.S., and "Vanguard Plans Push Into Active Bond Funds Says FT," which covers recent articles quoting CEO Salim Ramji on plans to launch more ETFs. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns rose again in September while yields were lower. 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" article states, "Bond fund assets worldwide increased in the latest quarter to $13.26 trillion, led higher by four of the largest bond fund markets -- the U.S., Luxembourg, Ireland and China. We review the ICI's 'Worldwide Regulated Open-End Fund Assets and Flows, Second Quarter 2024,' release and statistics below."
The piece says, "ICI's report says, 'Worldwide regulated open-end fund assets increased 1.5% to $70.20 trillion at the end of the second quarter of 2024.... The Investment Company Institute compiles worldwide regulated open-end fund statistics on behalf of the International Investment Funds Association (IIFA).'"
Our Vanguard article states, "Barron's writes on 'Vanguard's Second Wind,' explaining, 'Almost three months into his new job as Vanguard Group's CEO, Salim Ramji stepped onto a conference stage in New York.... Ramji shared plans that include spurring more innovation and growth in a somewhat surprising area: active management, specifically in fixed income. 'I think we can bring what Vanguard has brought to indexing to active fixed income, and give [clients] access to better performance at lower fees,' Ramji said at the conference, organized by the Financial Times.'"
It states, "The article continues, 'Indeed, he noted that the company has already started moving in that direction. In the past six years, Vanguard added eight new exchange-traded funds, with expense ratios ranging from 0.10% to 0.20%. It plans to launch two more bond ETFs later this year. It has hired more staff members and invested in its technology. And it poached bond maven Sara Devereux from Goldman Sachs to be its global head of fixed income.'"
Our first News brief, "Returns Up Again, Yields Lower in Sept." explains, "Bond fund returns were higher for the 5th month in a row in September, while yields were again lower. Our BFI Total Index rose 1.05% over 1-month and is up 10.41% over 12 months. (Money funds rose 5.26% over 1-year as measured by our Crane 100 Index.) The BFI 100 increased 1.14% in Sept. and 10.77% over 12 mos. Our BFI Conservative Ultra-Short Index was up 0.56% over 1-month and 6.41% for 1-year; Ultra-Shorts rose 0.59% and 6.95%. Short-Term returned 0.91% and 8.54%, and Intm-Term rose 1.25% in Sept. and 11.20%. BFI's Long-Term Index was up 1.39% and 12.35%. High Yield rose 1.12% in Sept. and 12.73% for 12 mos."
A second News brief, "The Journal Writes, 'How to Invest in Bonds in a World of Falling Rates.'" It says, "The article states, 'Falling rates have Wall Street recommending bonds again. Once considered a boring safe play, bonds have lately felt like anything but. Rising interest rates drove returns to their worst year on record in 2022. Now, with rates coming down, many investors have had gains instead. But buying bonds can confront investors with a bewildering array of options: Treasurys, company bonds or municipal debt? Individual bonds or funds?'"
Our next News brief comments, "Barron's Says 'Bond Funds Often Beat the Indexes.'" They tell us, "If there's one thing fund investors know by now, it's that actively managed funds don't beat the market. When it comes to bonds, that might not be as true as you think. More than two out of three active bond funds beat comparable index funds for the 12 months ended in June, according to Morningstar's most recent comparison of active and passive strategies. The story was even better for key bond funds that form the bedrock of many investors' portfolios: Nearly three in four intermediate-term core bond funds beat similar index funds, Morningstar found."
A BFI sidebar, "European MFS on Ultra-Short," says, "Crane Data hosted its European Money Fund Symposium in London last month. The event included a session titled 'Ultra‐Short Bond Funds & Beyond Short MMFs,' which featured Valerio Lupini of Fitch Ratings, Alastair Sewell of Aviva Investors and Rustam Muradov of J.P. Morgan A.M. Muradov tells us, 'In our funds, we believe in a more diversified portfolio, so we like to keep things granular. We still do invest in money market products, and we do invest in bonds, ABS, ABCP, etc. However, while corporate paper and the bank paper [are part of the allocation], we liked ABS more last year. Now we are a little bit more picky in ABS. It has to be at the right valuation and at the right spread.'"
Finally, another sidebar, "Barron's on Best Bond Moves," tells readers, "Barron's writes 'The Best Bond Moves to Make in an Era of Lower Interest Rates.' The piece states, 'The Federal Reserve has finally started cutting interest rates. That doesn't mean bond volatility is going away. The Fed cut rates on Sept. 18 by a surprisingly large amount -- half a percentage point, instead of the quarter-point move widely expected. Bond prices move inversely to yields, so bond prices should have risen, right? Wrong.'"
