Bond Funds Battered in June: Worst Month on Record for Outflows
By Hal M. Bundrick
NEW YORK (
)--Instead of a summer vacation, investors staged a summer evacuation from bond funds, mounting redemptions of $43.8 billion from taxable-bond funds and $16.4 billion from municipal-bond funds, according to
.Those totals made June the worst month on record for bond fund outflows.
Even venerable firms like Vanguard took it on the chin, experiencing its first firm-wide outflow in nearly 20 years. Investors cashed-out $432 million from Vanguard in June, including mutual funds, exchange-traded funds, and money market funds. The outflows at Vanguard were led by a $7.4 billion redemption from taxable bond funds and a $2.5 billion outflow from municipal bond funds. Across all providers, those two category classes have seen outflows of $68 billion. Incredibly, Vanguard still gained market share for the month as industry assets declined at an even faster rate.
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As bad as the news was for Vanguard, Pimco and Fidelity experienced even greater redemptions for the month. PIMCO lapped the field in outflows, with redemptions of $14.5 billion, followed by Fidelity with $5.1 billion.
Long-term funds saw an exit of $47.3 billion, the largest monthly outflow since October 2008. Morningstar computes net flows by the change in assets excluding the performance of a fund.
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Additional highlights from the report:
- Intermediate-term bond funds lost $24.4 billion in June, dragged down by outflows of $9.6 billion from the PIMCO Total Return fund. The DoubleLine Total Return mutual fund saw redemptions of $1.2 billion, its first monthly outflow. Other weak-performing bond categories included long government, emerging-markets bond, and inflation-protected bond funds.
- Not all fixed-income categories suffered in June and for the year-to-date. Bank-loan funds have amassed more assets than any other category so far this year.
- Meanwhile, international-equity and alternative funds had net inflows in June. Oakmark International continued its strong net gain of assets, collecting $753 million. In fact, the fund has doubled in size in the last year, collecting nearly $5.0 billion while recording a 35% return year to date.
- MFS led all providers with inflows of $1.4 billion.
--Written by Hal M. Bundrick
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