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 6/30/2023 | $36,384,630 |
|---|---|
| Net Asset Value1 | $15.52 |
| Effective Duration2 | 2.17 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.
Economic momentum carried into 2023 with gross domestic product (GDP) growing 2.0% annualized in the first quarter on strong household spending. Nominal growth has been in a declining trend, driven by the lagged effects of higher interest rates and a fading tailwind from pandemic-related fiscal stimulus. The resilience of the labor market has helped limit the impact of these headwinds on the U.S. economy. Full-year GDP estimates hover around 1.3% with most economists predicting a recession near the start of 2024.
While slowing the economy, the Federal Reserve’s (Fed) rate hiking campaign is also taming inflation. The Consumer Price Index (CPI) has declined from 6.5% at year-end to 4.0% through May. The federal funds rate target was increased 25 basis points at the May FOMC meeting to a target range of 5.0% - 5.25%. The Fed paused in June to assess data, but Chairman Powell also indicated that one to two more hikes may be needed this year to bring inflation down to its 2.0% target.
Short term U.S. Treasury yields moved higher over the quarter in response to the Fed’s actions. The 5-year Treasury yield increased by 58 basis points to 4.16% during the period. For the second quarter, the Commerce Short Term Government Fund’s return of -0.19% outperformed the Bloomberg 1-5 Year Government Index return of -0.88%. The Fund’s overweight to mortgage-backed securities relative to the benchmark contributed to performance. The Fund’s non-benchmark exposure to Treasury Inflation-Protected Securities (TIPS) detracted from performance.
The Fed’s actions are slowing the economy, and hope continues for either a soft landing or at worst a mild recession. Unemployment remains near historic lows, and the consumer, while becoming more cautious, has seemingly enjoyed recent wage gains. Should the Fed overshoot and cause a downturn, rates will likely be cut rapidly to limit the damage.