Short-Term Government Fund
Overview
Objective
Seeks current income consistent with preservation of principal.Strategy
Invests primarily in U.S. Government securities and government mortgage-backed securities.Fund Manager
Scott Colbert, CFA- Joined Commerce in 1993
- 34 years of experience
- Fund manager since Fund inception
Risk/Return
LOW - • - - - - - HIGHIn general, greater returns
are associated with greater risks.
Fund Statistics
| Inception Date | 12/12/94 |
|---|---|
| Ticker Symbol | CFSTX |
| Cusip | 200626109 |
| Minimum Initial Investment | $1,000 |
Commentary
| Total Fund Assets as of 12/31/2022 | $43,760,366 |
|---|---|
| Net Asset Value1 | $15.46 |
| Effective Duration2 | 2.22 Yrs. |
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
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.
After contracting over the first half of 2022, Gross Domestic Product (GDP) rebounded to a surprising 3.2% annualized growth rate in the third quarter on strong consumer spending and business investment. Initial fourth quarter GDP estimates are for about 3.8%, bringing estimates for full year GDP to 1.9%.
Inflation, as measured by the Consumer Price Index (CPI), continued its slide from 8.2% at the start of the quarter to 7.1% through November as the Federal Reserve’s (Fed) aggressive federal funds rate increases took hold. The Fed remained committed to pulling inflation back towards its 2.0% target with consecutive increases totaling 125 basis points (bps) during the quarter. The federal funds rate ended the quarter at 4.50% with the bond market forecasting a future terminal rate of 5.0% at year-end.
Short term (less than two-year maturities) U.S. Treasury yields moved sharply higher over the quarter in response to the Fed action while three to five-year yields were slightly lower. Two-year treasury yields rose 15 basis points while five-year treasury yields declined 9 basis points.
For the fourth quarter, the Commerce Short Term Government Fund’s return of 0.36% underperformed the Bloomberg 1-5 Year Government Index return of 0.93%. The Fund’s relative overweight to mortgages detracted from performance. Maintaining the Fund’s underweight in 2-year maturities relative to that of its benchmark contributed to performance.
While the Fed’s action slowed the housing market, inflation was still running well above the 2.0% target, unemployment remained low, and wages grew. Consensus is for the Fed to continue its tightening cycle into next year and to tip the economy into a mild recession sometime late in 2023. Fortunately, supply driven inflation is diminishing, and the Fed should be able to reverse course to limit the duration and severity of any near-term recession.