Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 
 
Blog Home
Bob Carey
Chief Market Strategist
Click for Bio

Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 

  The Pace Of Growth In Bond Mutual Fund Assets
Posted Under: Bond Market

 
View from the Observation Deck  

  1. Today's blog post is intended to offer investors a snapshot of the changing marketplace for taxable and tax-exempt (municipal) bond mutual funds over the past three calendar decades based on total assets under management (AUM). We also include data through 6/30/21 (not in chart).   
  2. Keep in mind that, while not a small market in its own right, the municipal bond market was valued at just $3.95 trillion (outstanding debt) as of the close of 2020, according to data from SIFMA.org. For comparative purposes, outstanding debt in the taxable U.S. Treasury and U.S. Corporate Bond markets stood at $20.97 trillion and $10.56 trillion, respectively.  
  3. As of 6/30/21, Taxable and Municipal Bond fund AUM stood at $4.6 trillion and $941.6 billion, respectively, according to the Investment Company Institute (ICI).
  4. The percent changes in AUM over the past three calendar decades (see chart) were as follows (Taxable vs. Tax-Exempt): 1990-1999 (221.87% vs. 156.78%); 2000-2009 (226.19% vs. 68.99%); and 2010-2019 (122.87% vs. 77.56%).
  5. The slower pace of asset growth registered in the third decade (2010-2019) could be due to the steep decline in interest rates and bond yields over time, in our opinion. From 12/29/89-12/31/19, the yield on the benchmark 10-year Treasury note (T-note) declined from 7.94% to 1.92%, or a drop of 602 basis points, according to data from Bloomberg. Bond yields continued lower after 2019. The yield on the 10-Year T-note closed at 1.25% at the close on 8/23/21.
  6. From 12/29/89-12/31/19, the yield on the Bond Buyer U.S. 40 Municipal Bond Index declined from 7.25% to 3.63%, or a drop of 362 basis points, according to data from Bloomberg. It stood at 3.41% at the close on 8/23/21. 
  7. The potential for higher individual tax rates moving forward could influence demand for municipal bonds. Even if the Biden administration were to leave current individual tax brackets as is, they are scheduled to change in 2026. 
  8. The Tax Cuts and Jobs Act of 2017 lowered the highest individual tax rate to 37%. Beginning in 2026, that rate reverts back to 39.6%. 

This chart is for illustrative purposes only and not indicative of any actual investment. The Bond Buyer U.S. 40 Municipal Bond Index tracks 40 highly-rated, long-term municipal bonds. 

Download a PDF of this post, please click here
Posted on Tuesday, August 24, 2021 @ 11:58 AM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
MARKET ANALYSIS


 PREVIOUS POSTS
US Stock Markets Ended August 20, 2021
US Economy and Credit Markets Ended August 20, 2021
A Global Snapshot Of Government Bond Yields
Money Market Fund Assets Remain Elevated
US Stock Markets Ended August 13, 2021
US Economy and Credit Markets Ended August 13, 2021
Sector Performance Via Market Cap. (2020 Bear Market & New Bull Market)
A Snapshot of Growth vs. Value Investing
US Stock Markets Ended August 6, 2021
US Economy and Credit Markets Ended August 6, 2021
Archive
Skip Navigation Links.
Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2022 All rights reserved.