With Federal Reserve interest rate cuts pushed to later in 2024, the first quarter was mixed for the largest bond funds.
The funds with the greatest sensitivity to changes in interest rates lost ground as bond prices fell in response to expectations that the Fed would hold rates higher for longer. However, funds that emphasized corporate bonds and other corners of the credit markets benefitted from the economy’s continued strength.
For investors in the most widely held funds, returns were often subpar. Among the 10 largest index strategies, only Vanguard Short-Term Inflation-Protected Securities ETF VTIP ranked in the top half of its category, and three landed in the bottom 25% of their categories. Among the 10 largest active funds, four landed in the top half of performance. However, only Pimco Total Return PTTRX posted strong enough returns to rank in the top 20% of its category.
For this article, performance data is based on the…
