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October 11, 2023

FIXED INCOME FUNDS REALIZE FIRST QUARTERLY LOSS OF 2023—LOAN PARTICIPATION FUNDS REMAIN RESILIENT

by Jack Fischer.

Fixed income funds realized a return of negative 1.70% on average during the third quarter of 2023, marking the first negative quarterly return since Q3 of last year.Of the 51 Lipper fixed income classifications, only 11 ended the second quarter with gains—down from 23 last quarter.

Taxable bond funds (-1.14%) outperformed tax-exempt bond funds (-3.31%) in quarterly performance for the third consecutive quarter—the last time taxable outperformed tax-exempt in three straight quarters was Q2 through Q4 2020. Tax-exempt bond funds are on pace to log their first back-to-back calendar years with negative returns since 1980 and 1981.

Summary:

  • The top-performing Lipper classifications throughout Q3 were Loan Participation Funds (+2.91%), Specialty Fixed Income Funds (+1.94%), Ultra-Short Obligations Funds (+1.42%), Short High Yield Funds (+1.27%), and Short Investment Grade Debt Funds (+1.27%).
  • While Lipper Loan Participation Funds was the top returning fixed income classification over the quarter, newly issued leverage loan debt fell to its lowest level since Q2 2020, in terms of overall volume. In terms of total number of issues, leverage loan issuance hit its lowest mark since Q3 2010.
  • General U.S. Treasury Funds (-6.40%), New York Municipal Debt Funds (-4.53%), Corporate Debt A-Rated Funds (-4.40%), Virginia Municipal Debt Funds (-4.32%), and Pennsylvania Municipal Debt Funds (-4.31%) closed the quarter as the worst-performing classifications.

Click here or the Download Full Report link in the upper right-hand column of this page to download the Third Quarter 2023 FundMarket Insight Report: FIXED INCOME FUNDS REALIZE FIRST QUARTERLY LOSS OF 2023—LOAN PARTICIPATION FUNDS REMAIN RESILIENT

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