U.S. Bond Funds Suffer Second-Biggest Redemptions Since 1992

June 7, 2013 Leave a comment

U.S. Bond Funds Suffer Second-Biggest Redemptions Since 1992 (1)

By Christian Baumgaertel on June 06, 2013

http://www.businessweek.com/news/2013-06-06/u-dot-s-dot-bond-funds-suffer-second-biggest-redemptions-since-1992-1

U.S. bond funds suffered their second-worst weekly withdrawals in more than two decades after global bond markets slumped in May.

Investors pulled $9.1 billion from fixed-income mutual funds and exchange-traded funds in the week through June 5, Denver-based Lipper said today in an e-mailed statement. That’s the second-biggest redemptions for a week since the company started tracking the data in 1992. Corporate high-yield mutual funds saw redemptions of $3.2 billion during the period, Lipper said, the largest weekly withdrawal on record.Global bond markets posted their biggest monthly losses in nine years in May as the U.S. dollar rallied and stocks reached record highs. The more than $40 trillion of bonds in the Bank of America Merrill Lynch Global Broad Market Index fell 1.5 percent on average. Bill Gross’s Pimco Total Return Fund (PTTRX), the world’s largest mutual fund, had redemptions of $1.32 billion in May, the first net withdrawals since 2011, according to Chicago-based Morningstar Inc. (MORN)

Gross, co-chief investment officer of Pacific Investment Management Co. in Newport Beach, California, last month predicted that the three-decade bull market in bonds had ended in late April. He said today that he’s sticking to high-quality bonds as market risks are rising.

“Treasuries in the last few weeks have certainly been the place to be,” Gross said during an interview on Bloomberg Television’s “Market Makers” with Erik Schatzker and Sara Eisen. Stocks, high-yield debt, currency and emerging-market bonds are all in “disarray,” he said.

To contact the reporter on this story: Christian Baumgaertel in Boston at cbaumgaertel@bloomberg.net

Filed under Macro Trends

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