The May issue of our Bond Fund Intelligence, which will be sent to subscribers Friday morning, features the stories, "Bloomberg on Vanguard’s Barrickman, Passive Funds," which reviews a piece on bond index funds, and "JPM's Low Duration Bond Fund Update Says Inflows," which excerpts from a brief on ultra-short bond funds. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns rose again in April while yields inched 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.) (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 "Bloomberg" article quotes the piece, "Vanguard's Trillion-Dollar Man Leads a Fixed-Income Revolution." The piece says, "When March's bank failures ignited a historic bond rally, few, if any, made more money than Josh Barrickman. His army of funds gained roughly $26 billion, the equivalent of more than $1 billion in paper profits every single trading session."
It continues, "Yet Barrickman didn't predict Silicon Valley Bank's collapse, or Credit Suisse's tortured final days. He doesn't even have a view (at least that he's willing to share) on what the Federal Reserve will do next. He runs Vanguard Group Inc.’s $1 trillion bond indexing business for the Americas, a class of investing that -- to the outside world, at least -- is as vanilla as it gets."
Our "JPM" piece states: "J.P. Morgan Securities published a brief, "Low-duration bond fund update" in it latest "Short-Term Market Outlook And Strategy." They write, "For the low-duration bond funds we track, ultrashort and short-term bond funds saw decent inflows in January, with total AUMs higher by an estimated $9bn. This can be partly explained by investor appetite to extend in duration. However, the growth has since moderated, with total AUMs declining by $13bn over the past two months following January-end."
JPM explains, "This is consistent with the broader sell-off that occurred in the fixed income and equity markets during the same period, particularly as investors sought cover from the market volatility and positioned for possible changes to monetary policy and concerns following the regional banking crisis in March."
Our first News brief, "Returns Up Again, Yields Down in April," says, "Bond fund returns moved higher and yields were mixed last month. Our BFI Total Index rose 0.60% over 1-month and is up 0.53% over 12 months. The BFI 100 rose 0.84% in April and gained 0.32% over 1-year. Our BFI Conservative Ultra-Short Index was up 0.61% over 1-month and is up 2.69% for 1-year; Ultra-Shorts rose 0.49% and are up 2.04% over 12 mos. Short-Term returned 0.56% and 0.85%, and Intm-Term rose 0.72% and -0.55% over 1-year. BFI's Long-Term Index rose 0.72% and -1.01%. High Yield rose 1.11% in April and 1.00% over 1-year."
A second News brief, "Morningstar Says, '`As Demand for Green Bonds Grows, Assets in Sustainable Bond Funds Surge,' writes, "Assets in sustainable and impact bond funds have grown 11 times over the past decade, reaching $516 billion at the end of 2022, according to Morningstar research. These funds own green, social, sustainability, and sustainability-linked bonds, all commonly referred to as GSS+ bonds. Even though net inflows into sustainable bond funds slowed in the challenging market environment of 2022, they remained positive. By contrast, traditional bond funds experienced massive outflows during the same period."
Our News brief, "BankRate Writes on the 'Best Short-Term Bond Funds in May 2023.' They comment, 'Bond prices fell throughout 2022 as the Federal Reserve hiked interest rates to combat high inflation, but with an end to rate increases potentially in sight, investors may be able to take advantage of attractive yields in short-term bonds.'"
Another brief, "Reuters Says, 'World's biggest bond markets left picking up the pieces after March mayhem.' The piece tells us, 'In mid-March, as prices for U.S. Treasury bonds swung wildly following the collapse of Silicon Valley Bank, the trading desk at Legal & General Investment Management hit its top limits for both profit and loss several times in a single day.'"
A BFI sidebar, "Barron's on 'Nirvana'," quotes the weekly's "Top Bond Investors See Opportunities in Turmoil. BlackRock's CIO Says It's 'Nirvana.'" It states, "After a rough 2022, the bond market has come roaring back this year. While it's hard to predict how bonds will perform ahead given interest rate uncertainty, top bond investors are enthusiastic about what the asset class has to offer."
Finally, another sidebar, "SIFMA on Bond Markets," comments, "SIFMA posted a report by Coalition Greenwich, titled, 'Understanding Fixed-Income Markets in 2023,' which gives some broad statistics on the overall bond market. It says, 'The U.S. fixed-income markets are the largest in the world, comprising 41.3% of the $122.6 trillion of securities outstanding across the globe, or $50.6 trillion (as of 2Q22). This is 2.2x the next largest market, the EU. U.S. market share has averaged 38.9% over the last 10 years, bottoming at 37.5% in 2013 and peaking last year."
