The November issue of our Bond Fund Intelligence, which will be sent to subscribers Monday a.m., features the articles, "State Street IM on ETF Flows, Core Bond Funds Rebound," which reviews record bond ETF inflows and a rebound in core funds; and "PIMCO's Dan Ivascyn on Rate Volatility, Return Prospects," which discusses higher starting yields and opportunities in fixed income. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns rebounded in October while yields increased again. 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 lead article states, "State Street Investment Management posted an 'ETF Flows' piece titled, 'Fall back, and look forward,' which says, 'Following their worst monthly return in over four years, broad core bonds had their best monthly return in over three years, rallying by more than 2.4% in October. Right as this reversal occurred, bond ETFs recorded their greatest monthly inflow ever: $74 billion. October also marked a record sixth consecutive month with more than $50 billion of inflows. Before this year, bond ETFs had never recorded even one $50 billion-plus month.'"
The article says, "It continues, 'The strong October haul, along with that trend of $50 billion-plus months, pushed fixed income ETF inflows to over $542 billion year to date with flows headed for $660 billion by the end of the year (based on my projections). These inflows have come from a more balanced mix of low-cost and active bond ETFs. That's a departure from prior years, when low-cost had a firmer grip on the flow share, as the use of active bond ETF strategies has grown within portfolios.'"
Our "PIMCO's Dan Ivascyn" article states, "PIMCO published a Q&A, 'Many Ways to Win: Dan Ivascyn on Making the Most of Rate Volatility,' which interviews Group CIO Dan Ivascyn on the recent selloff in bonds, today's higher starting yields and why PIMCO continues to see attractive opportunities in high-quality fixed income."
It continues, "Asked about recent volatility, Ivascyn responds, 'We've had this, you know, choppy market that feels quite technically driven over the course of the last few weeks.... [T]his is the type of really choppy price action, messy price action, suggestive of the fact that, you know, sure, there are fundamental reasons why rates have gone higher, but there's also been some deleveraging, some technical unwinds.'"
Our first News brief, "Returns Rebound in October, Yields Up," states, "Bond fund returns jumped in October after seeing sharp declines in September. Yields rose again this past month. Our BFI Total Index rose 1.77% over 1-month and rose 1.21% over 12 months. (Money funds rose 3.60% over 1-year as measured by our Crane 100 Index.) The BFI 100 rose 1.81% in October and rose 0.81% over 12 mos. Our BFI Conservative Ultra-Short Index was up 0.46% over 1-month and up 3.70% for 1-year; Ultra-Shorts rose 0.48% and rose 3.65%. Short-Term rose 0.92% and rose 2.22%, and Intm-Term jumped 2.31% in October and rose 0.02% over 12 mos. BFI's Long-Term Index was up 2.49% and down 0.81%. High Yield rose 0.63% in October and rose 2.06% over 12 months."
A second News brief, "The New York Times Says 'Why Bad News in the Bond Market May Be Good News for Investors,'" states, "They write, 'In the contrarian logic of investing, rising interest rates have made bonds much more attractive.' It adds that higher yields 'provide more income now and increase the odds of better long-term returns.'"
Our third brief says, "Barron's Writes, '3 Areas Where BlackRock's Bond Guru Is Finding Income,' quoting BlackRock's Rick Rieder, 'Now we have TIABA -- there is a big alternative.' He says, 'This is a very unique point in time. Usually, when you can buy yielding assets at these levels, particularly high-yield, there is an organic problem with those companies or sectors. Today, you don't have that. You have an economy growing.' Rieder adds, 'Emerging markets have become more than a diversifier,' and says they can generate additional returns and considerable income."
A BFI sidebar, "Vanguard: Muni Bond Yields," explains, "Vanguard writes, 'Municipal bond yields at nearly their best in a decade.' It states, 'Municipal bond yields have reached levels that provide tax-sensitive investors with a rare opportunity. While the broader fixed income market has weakened through 2026, municipal bonds have experienced an even steeper decline -- not due to softening fundamentals, but because of technical supply-and-demand imbalances.'"
Finally, another sidebar, "Baird's Stanek on Rising Yield," states, "Barron's published, 'This Veteran Bond Manager Is Making the Most of Rising Yields. What She Likes Now.' It states, 'Bonds offer investors some of the most attractive yields in decades on a nominal and an inflation-adjusted basis, says Mary Ellen Stanek, managing director and chief investment officer emeritus at Milwaukee-based Baird Advisors. With 47 years of fixed-income investment management experience under her belt, Stanek should know.'"
