The September issue of our Bond Fund Intelligence, which was sent to subscribers Wednesday morning, features the lead story, "BlackRock, IHS Markit on Bond ETFs for Portfolio Managers," which reviews a recent webinar discussing ETFs in portfolio construction; and "TCW's Rivelle Stepping Down Says WSJ, MetWest Filing," which quotes from a recent WSJ story and filing on changes at TCW. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns inched lower in August while yields rose. 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. Also, watch for plenty of Ultra-Short Bond Fund content at next week's Money Fund Symposium, which takes place live Sept. 21-23 in Philadelphia.)
BFI's "ETF" piece reads, "A webinar entitled, 'Shifting the Course on Bond Portfolios: The Growth and Role of ETFs in Portfolio Construction,' sponsored by iShares and IHS Markit, explains in its overview, 'The global bond market is both massive in size and yet highly fragmented. According to SIFMA, the size of the global bond market was nearly $120 trillion as of Q1 2021 with hundreds of thousands of individual securities. Historically, fixed income portfolio construction involves creating strategies at the security level, buying and selling potentially hundreds or even thousands of individual bonds."
It says, "Bond ETFs are transforming the way fixed income portfolio managers construct bond portfolios and manage risk. Increasingly, these investors -- whether asset managers, asset owners, or insurers -- are using ETFs for a range of uses to complement individual bonds. Hear from IHS Markit and BlackRock experts on how fixed income ETFs are increasingly becoming an effective tool for portfolio managers." The webinar features Salman Zaidi, Fixed Income Product Strategist at BlackRock, and Nick Godec, Indices Product Management for IHS Markit."
The TCW article discusses The Wall Street Journal piece, 'TCW's Investment Chief and CEO Set Departures After Employees Threaten to Quit.' It comments, "Bond giant TCW Group Inc. is parting ways with two of its top executives after key employees threatened to quit the firm earlier this year. TCW said Wednesday that Tad Rivelle, who ran the firm's bond-investing business, would retire at the end of the year. TCW's chief executive, David Lippman, is expected to leave after his current contract expires in Dec. 2022, people familiar with the matter said."
The Journal explains, "Steve Kane and Bryan Whalen will succeed Mr. Rivelle as investment chiefs for the firm's fixed-income division, TCW wrote Wednesday in a note to clients. Messrs. Kane and Whalen, along with Laird Landmann, will remain portfolio managers, the firm said. Patrick Moore, who runs TCW's client-services group, and Mr. Kane told colleagues earlier this year they planned to resign in part over longstanding squabbles between the firm's senior leaders, including Messrs. Rivelle, Lippman and Landmann. They rescinded their resignations after the firm assured them they would soon act on a succession plan that had been in the works for some time."
A News brief, "Returns Dip, Yields Up in August," explains, "Bond fund returns fell slightly and yields inched higher last month. Our BFI Total Index fell -0.01% for 1-month but rose 3.17% for 12 months. The BFI 100 rose 0.00% in August and 3.09% over 1 year. Our BFI Conservative Ultra-Short Index was up 0.03% for 1-mo and 0.36% for 1-yr; Ultra-Shorts averaged 0.00% and 1.07%, respectively. Short-Term increased 0.04% and rose 2.12%, and Intm-Term fell -0.10% in August but rose 2.05% over 1-year. BFI's Long-Term Index fell -0.01% in August but gained 2.11% over 1-year. Our High Yield Index rose 0.43% in Aug. and 8.81% over 1-year."
Another News brief, "Fitch Ratings on European Bond Funds," says, "Their latest 'European Short-Term Bond Fund Dashboard: September 2021,' explains, "European short-term bond funds (STBFs) have diverse risk profiles in terms of portfolio credit quality and sector allocation, says Fitch Ratings. Fitch primarily defines STBFs as funds with a target duration of one to three years. Fitch counted 628 such funds in Europe as of end-1H21 with combined assets under management (AUM) of EUR337 billion. Traditional money market fund (MMF) investors increasingly have been considering STBFs as part of cash segmentation strategies in response to prolonged low or negative rates."
A sidebar "Barron's on Pax High Yield," explains, "Barron's recently featured an article entitled, 'A High-Yield Bond Fund Says Goodbye to Fossil Fuels,' which profiles Pax High Yield Bond Fund. They write, 'It might be a surprise to some investors that not all environmentally oriented mutual funds are free of traditional fossil-fuel companies. But the Pax High Yield Bond fund is living up to its ESG -- environmental, social, and governance -- mandate when it comes to energy."
Finally, a sidebar entitled, "Bonds & ETFs Approach $7T," tells readers, "Bond funds and ETFs continue to see strong inflows, and they show no signs of slowing or stopping. Combined, they should break the $7 trillion asset level in coming months. Last month they totaled $6.742 trillion. ICI's 'Combined Estimated Long-Term Fund Flows and ETF Net Issuance,' says, 'Bond funds had estimated inflows of $14.20 billion for the week, compared to estimated inflows of $12.38 billion during the previous week.' ... Over the past 5 weeks, bond funds and bond ETFs have seen inflows of $59.8 billion."
