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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 The Fund is managed by the Fixed Income Team, a group of senior-level investment professionals who average 29 years of experience.
Risk/Return

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In general, greater returns are associated with greater risks.
The Short-Term Government Fund's net asset value and yield are not guaranteed by the U.S. Government or by its agencies, instrumentalities or sponsored enterprises.
 

Fund Statistics

Inception Date 12/12/94
Ticker Symbol CFSTX
Cusip 200626109
Minimum Initial Investment $1,000
 

Commentary

Economic momentum carried Gross Domestic Product (GDP) to 2.80% annualized for 2024, but a significant slowdown in consumer spending has lowered S&P’s first quarter 2025 GDP estimate to 0.30% annualized.  Recently announced trade tariffs and slowing economic growth increase the near-term risk of a recession. 

The Federal Reserve (Fed) left the federal funds target rate unchanged at 4.25% - 4.50% at each of its January and March meetings. Characterizing risks to its dual mandate as “balanced” in January, by March the Fed worried about increased economic uncertainty. The pace of quantitative tightening was slowed by reducing the monthly redemption of Treasury securities.  This action delivers the effect of a rate cut without having to cut rates.

Softer economic data, Personal Consumption Expenditures (PCE) inflation stabilizing at 2.50%, and a cautious Fed combined to drive Treasury bond yields lower for the quarter.  The five-year treasury yield ended 43 basis points lower at 3.95%.

For the first quarter, the Commerce Short Term Government Fund’s return of 1.77% underperformed the Bloomberg US 1-5 Year Government Bond Index return of 2.03%.  A shorter duration relative to the benchmark detracted from performance as rates fell. The Fund’s overweight to mortgage-backed securities (MBS) contributed to performance.

 

 
 
Total Fund Assets as of 3/31/2025 $30,446,672
Net Asset Value1 $16.22
Effective Duration2 2.37 Yrs.
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. These risks may result in greater share price volatility.

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.

Commerce Short-Term Government Holdings

February 2025  

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.
  4. Please click the links for additional disclosures.