The June issue of our Bond Fund Intelligence, which was sent to subscribers Monday morning, features the lead story, "Bond Fund Assets Hit $5.4T; Bond ETFs Over $1.1 Trillion," which covers the continued inflows into the bond fund market; and "Wells Fargo A.M.'s Roberts on Sustainable Investing," which quotes from an ESG piece in Wells' latest Income Generator. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns jumped while yields were flat in May. We excerpt from the new issue below. (Note: Please join us later this week for our "Asian Money Fund Symposium" webinar, which will take place Thursday, June 17 from 10:00am-12:00pm Eastern.)
BFI's "Assets" piece reads, "Bond funds continue to see inflows, though funds have been punished a bit by rising rates and declining NAVs. Nonetheless, asset levels in both bond funds and bond ETFs continue to break records, with funds moving over $5.4 trillion and ETFs surpassing $1.1 trillion. We review the latest growth and also look at the largest and fastest growing funds below."
It continues, "ICI's latest 'Trends in Mutual Fund Investing – April 2021' shows bond fund assets rose $96.2 billion, or 1.8%, to $5.398 trillion in April, after rising $10.2 billion in March. Over the 12 months through 4/30/21, bond fund assets increased by $919.8B, or 20.5%. The number of funds rose by 1 in April to 2,120, down 28 over a year."
Our Wells ESG article explains, "Wells Fargo Asset Management covers 'Innovations in Sustainable Fixed Income Investing' in their latest 'Income Generator' publication. Author Helen Roberts explains, 'Sustainable investing is a top priority for many today. We can see that interest across the investment spectrum—from investors, to companies that issue new securities, to asset managers that are creating new products and to regulators that are formalising guidelines regarding sustainability. Further, the COVID‐19 pandemic has likely accelerated the trend towards sustainability, as we focus more closely on the vulnerability and resilience of not just society, but also of our planet.'"
Roberts continues, "With this mounting focus on environmental, social and governance (ESG) issues, the number of ESG‐related product launches has increased substantially over the last three years. Broadridge calculated that more than half of all global long‐term fund inflows went into ESG‐type mandates during the first three quarters of 2020."
A News brief, "Returns Up Again, Yields Mixed in May," says, "Bond fund returns rose and yields were flat last month. Our BFI Total Index rose 0.34% in 1-month and 5.10% in 12 mos. The BFI 100 rose 0.36% in May and 4.50% over 1 year. Our BFI Conservative Ultra-Short Index was up 0.06% over 1-mo and 0.95% over 1-yr; Ultra-Shorts averaged 0.08% in May and 2.30% over 12 mos. Short-Term increased 0.21% and 4.01%, and Intm-Term rose 0.36% last month and 3.36% over 1-year. BFI's Long-Term Index rose 0.37% in May and 2.85% over 1-year. Our High Yield Index jumped 0.42% in May and 13.05% over 1-year."
Another News brief quotes the Bloomberg article, "Bond ETFs With $1 Trillion Shrug as Fed Starts to Withdraw." It reads, "The Federal Reserve ... will start reversing its surprise decision last March to scoop up bond ETFs as part of efforts to keep credit flowing amid the coronavirus crash.... The Fed's foray into the credit market was perceived as a stamp of approval on a structure that's long been the subject of criticism and hyperbole."
A third News update covers, MarketWatch's "Municipal-Bond Inflows Are Smashing Records in 2021," which tells us, "Data from Refinitiv Lipper ... shows that through mid‐May, investors had plowed $41.7 billion into muni‐bond funds. That's nearly the same amount as in all of last year, putting 2021 on track to be one of the best years in history."
Finally, a sidebar, entitled, "MStar Compares ETFs, Funds writes, "A post from Morningstar, 'Examining Active Bond ETFs Potential,' discusses, 'Considerations to make when assessing actively managed bond ETFs relative to their mutual fund share class compatriots.' It tells us, 'Actively managed bond exchange‐traded funds boast the same benefits over actively managed bond mutual funds that their stock‐picking counterparts do. In most cases, assuming all else equal, their lower fees and the prospect for greater tax efficiency make consuming these actively managed bond portfolios in an ETF wrapper more desirable.'"
Contact us if you'd like to see our latest Bond Fund Intelligence and BFI XLS spreadsheet, or our Bond Fund Portfolio Holdings data. Also, mark your calendars for next year's Bond Fund Symposium, which is scheduled for March 28-29, 2022, in Newport Beach, Calif.
