Bond funds hit with biggest outflows ever during
a rush to exit the bond market really hit a crescendo. In the week ended June 26, investors pulled a record $23.3 billion
from bond funds.
All bond categories were affected by the pull-out: emerging
markets, high yield, investment grade, and mortgage-backed securities funds all
saw their largest weekly outflows ever.
Overall, bond funds shrank by 0.9% this week, marking the
second-largest weekly loss on record in terms of assets under management. The week's
outflows have been compared to the capitulation observed at the height of the
financial crisis in October 2008.
The yield on the 10-year U.S. Treasury note hit a high of 2.64% on
Monday, but the bonds have rallied this week, and the 10-year is now trading at
2.48%.
Below is a breakdown of this the asset flows:
Flows by Asset Class
Bonds: largest weekly outflow ever
of $23.3 billion; outflow of $58 billion over 4 weeks
Equities: $13.1 billion
outflows this week; $6.4 billion via ETF's and $6.7 billion via managed funds
Precious metals: $2.8 billion
outflows this week, with outflows for 20 straight weeks
MMF: $4.3 billion inflows this
week
Flows by Fixed Income Sector
Emerging Market debt funds saw the
largest ever outflows this week of $5.6 billion
or 2.3% of AUM. The pace of the Emerging Market debt outflows has now only been
exceeded by the 2008 melt-down. Other categories seeing their largest ever
outflows this week:
- Municipal Bonds outflows at
$4.5 billion.
- Investment Grade outflows at
$4.9 billion.
- High Yield bonds outflows at
$6.8 billion
- Mortgage Backed Securities outflows
at $1.3 billion