Bond Funds Post a Quarterly Increase for the First Time in 2018

Fixed income funds posted a positive return of 0.38% on average for Q3 2018 after being underwater for Q2 (-0.25%) and Q1 (-0.56%). The general domestic taxable fixed income funds macro-group recorded the largest increase (+1.31%) for the quarter among Lipper’s fixed income fund macro-groups. Investors appeared to have an increased appetite for risk; this group was pushed higher by two peer groups that invest primarily in below-investment-grade debt: High Yield Funds (+2.10%) and Loan Participation Funds (+1.66%). Also contributing to the overall increase for the quarter were the investment-grade corporate debt funds (+0.40%), while the government/Treasury fund (-0.20%), municipal debt fund (-0.14%), and world income fund (-0.07%) groups were all in the red. At the peer group level exactly half of Lipper’s fixed income fund classifications (24 of 48) recorded increases for the quarter, led by the aforementioned High Yield Funds group.

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