Bond Fund
Overview
Objective
Seeks total return through current income and, secondarily, capital appreciation.
Strategy
Invests primarily in a broad range of government and investment-grade corporate bonds and other fixed-income securities.
Fund Manager
The Fund is managed by the FixedIncome Team, a group of senior-level
investment professionals who average
29 years of experience.
Risk/Return
LOW - - • - - - - HIGH
In general, greater returns are associated with greater risks.
Fund Statistics
| Inception Date | 12/12/94 |
|---|---|
| Ticker Symbol | CFBNX |
| Cusip | 200626208 |
| Minimum Initial Investment | $1,000 |
Commentary
| Total Fund Assets as of 6/30/2024 | $1,141,879,799 |
|---|---|
| Net Asset Value1 | $17.59 |
| Effective Duration2 | 6.08 Yrs. |
Footnotes:
1. The Net Asset Value represents the assets of the fund (ex dividend) by the total number of shares.
2. Duration is the method determining a bond's price sensitivity, given changes in interest rates.
3. The composition of the portfolio is subject to change in the future.
Portfolio Holdings
Investments in fixed income securities are subject to the risks associated with debt securities including credit and interest rate risk. When interest rates rise, the prices of bonds and therefore the value of fixed income mutual fund shares can decrease and an investor can lose principal value. The guarantee on U.S. government securities applies only to the underlying securities of the Fund if held to maturity and not to the value of the Fund's shares. Mortgage-backed securities are subject to prepayment risks, which may result in greater share price volatility. Asset-backed securities may be less liquid than other securities and therefore more difficult to value and liquidate, if necessary. Foreign investments may be more volatile than investment in U.S. securities and will be subject to the risks of currency fluctuations and political developments.
Holdings and allocations shown are unaudited, and may not be representative of current or future investments. Holdings and allocations may not include the Fund's entire investment portfolio, which may change at any time. Fund holdings should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities.
A prospectus for the Commerce Funds containing more complete information may be obtained by calling 1-800-995-6365 or by downloading it from this website. Please consider a Fund's objectives, risks, and charges and expenses, and read the prospectus carefully before investing. The prospectus contains this and other information about the Fund.
The mutual funds referred to in this Web site are offered and sold only to persons residing in the United States and are offered by prospectus only. The prospectus contains more complete information about the funds, including charges and expenses, and should be read carefully before investing.
The method of calculation of the 30-Day Standardized Subsidized Yield is mandated by the Securities and Exchange Commission and is determined by dividing the net investment income per share earned during the last 30 days of the period by the maximum public offering price (“POP”) per share on the last day of the period. This number is then annualized. The 30-Day Standardized Subsidized Yield reflects fee waivers and/or expense reimbursements recorded by the Fund during the period. Without waivers and/or reimbursements, yields would be reduced. This yield does not necessarily reflect income actually earned and distributed by the Fund and, therefore, may not be correlated with the dividends or other distributions paid to shareholders. The 30-Day Standardized Unsubsidized Yield does not adjust for any fee waivers and/ or expense reimbursements in effect. If the Fund does not incur any fee waivers and/or expense reimbursements during the period, the 30-Day Standard Subsidized Yield and 30-Day Standardized Unsubsidized Yield will be identical.
US economic growth has slowed to a market estimated 2.20% annualized rate in the second quarter of 2024 from 3.40% at yearend 2023. The Federal Reserve’s (Fed) sustained commitment to higher interest rates is curbing consumer spending and lowering inflation.
The Fed left the target federal funds rate unchanged at 5.25%-5.50% at both its May and June meetings. Core Personal Consumption Expenditures (PCE), the Fed’s preferred inflation measure, eased to 2.60% year-over-year in May, continuing a declining trend toward the Fed’s 2.00% target. The unemployment rate registered 4.1% for June, continuing a gradual rise over the past 18 months from the recent cycle low of 3.4% reported in January 2023.
Treasury bonds returns were mixed over the second quarter as the market digested conflicting economic signals. Ultimately, Treasury yields for intermediate and long maturities ended the second quarter 15-20 basis points higher. The 10-year treasury yield increased 20 basis points to end the quarter at 4.40%.
For the second quarter, the Commerce Bond Fund’s return of 0.31% outperformed the Bloomberg Aggregate Bond Index return of 0.07%. An underweight allocation to agency mortgage-backed securities contributed to performance. An overweight allocation to corporate bonds detracted from performance.
A more cautious consumer is generating mild concern about the occurrence of a recession. Regardless, consumption has grown at a reasonable 1.50% and disposable income is up. With the US job market cooling and the unemployment rate approaching the Fed’s neutral target of 4.20%, the Fed rate cut debate is expected to heat up.