April 5, 2018

Bond Fund Prices Fall in Q1

by Patrick Keon

Fixed income funds retreated 0.56% on average for Q1 2018, a dip of 1 percentage point from their positive 0.46% return for Q4 2017. While all five of Lipper’s fund macro-groups had posted gains for Q4, only World Income Funds (+0.99%) did so this past quarter. At the peer group level only 10 of Lipper’s 47 peer groups had positive returns for Q1, compared to 36 for Q4. Multiple factors contributed to weighing down bond fund prices in Q1, led by the current interest-rate environment, stronger inflation data, and rising bond yields.

Highlights:

  • Thanks to the continued weakening of the U.S. dollar, World Income Funds (+0.99%) outperformed all other Thomson Reuters Lipper macro-classifications.
  • The general domestic taxable fixed income macro-group was off 0.43%, driven lower by losses from the Flexible Income Funds and General Bond Funds peer groups.
  • Municipal debt funds lost 0.84% on average; both single-state muni debt funds (-1.00%) and national muni debt funds (-0.64%) were in the red.
  • Investment-grade corporate debt funds (-1.04%) suffered the worst loss on average among the macro-groups.
  • Government/Treasury funds retreated 0.84% for Q1, led lower by the losses from General U.S. Treasury Funds (-2.20%).

Click here or the Download Full Report link in the upper right hand column of this page to download the First Quarter 2018 FundMarket Insight Report: Bond Fund Prices Fall in Q1

 

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